Property as Trading Stock Trading stock, in relation to property, is anything that is produced or acquired for sale or exchange in the ordinary course of business. Section 70-10 ITAA 1997 INCOME TAX ASSESSMENT ACT 1997 - SECT 70.10 Meaning of trading stock . This can include property. Where land (property) is held for the purpose of resale AND business activity involving dealing in land has commenced then the property can be deemed to be trading stock. Taxation Determination TD 92/124 https://www.ato.gov.au/law/view/document?docid=TXD/TD92124/NAT/ATO/00001 . Whether a business is being carried on depends on a number of factors. These are summarised in Taxation Ruling TR 97/11 at paragraph 13 https://www.ato.gov.au/law/view/document?docid=txr/TR9711/nat/ato/00001 and include: · whether the activity has a significant commercial purpose or character; this indicator comprises many aspects of the other indicators; · whether the taxpayer has more than just an intention to engage in business; · whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity; · whether there is repetition and regularity of the activity; · whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business; · whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit; · the size, scale and permanency of the activity; and · whether the activity is better described as a hobby, a form of recreation or a sporting activity. Even one off transactions can amount to carrying on a business. “…if the transaction involves the acquisition and disposal of property, the nature of that property (Edwards v. Bairstow ; Hobart Bridge 82 CLR at 383). For example, if the property has no use other than as the subject of trade, the conclusion that the property was acquired for the purpose of trade and, therefore, that the transaction was commercial in nature, would be readily drawn..” Quote from Paragraph 49(g) of Taxation Ruling TR 92/3 https://www.ato.gov.au/law/view/document?DocID=TXR/TR923/NAT/ATO/00001 Why does it matter? The main reason is because only property sales taxed as capital gains are able to use the 50% CGT discount.