CGT on Sale of Farm Land

Question

Following the death of her father on 25 April 1999, my wife inherited a 1/3 share of a block of farm land. This land was transferred to her and two sisters under a tenancy in common in 2004.
Under a determination by the executor the occupation and use of the land rent free by the proprietors’ brother, which had started well prior to the father’s death, was to continue indefinitely.
The brother has now been farming the land on his own account for 30 years but apart from paying the rates on the property, has provided no financial benefit to the owners.
The proprietors have now determined to sell the property.
We wish to confirm whether this sale will generate a CGT liability.
If CGT is payable, the amount to be included in the tax return would be about $40,000.
My wife is aged 55 and works part-time, earning about $13,000 per annum.
We understand that the strategies to reduce the total tax cost are either salary sacrifice or negative gearing. As we do not wish to take on any debt, is salary sacrifice of 100% of her wages an effective strategy for my wife to undertake?

Yours Sincerely

Andrew Chesson

Answer

Just a quick note to let you know that our private ruling application succeeded and the land is now considered an active asset for my wife’s tax purposes.

Many many thanks for your help.

Best wishes

Andrew Chesson

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