Whether a property transaction is an investment or trading (ie dealing) activity is of key importance to each of the parties to the transaction since it will dictate how they are taxed. Land, more than most other assets, is capable of being held either as an investment or as trading stock. For any particular property transaction, this difficult question must be determined from the tax perspective of each party—the same transaction may be treated as an investment activity for one party and trading for another.

This distinction will be relevant in practice in many circumstances, including:

1. •

   when advising a property owner on the tax consequences of selling it

2. •

   when acting for the purchaser of property (whose intention with respect to the property upon acquisition is often determinative of the subsequent tax treatment), and

3. •

   when advising the purchaser of shares in a company owning property upon post-acquisition tax liabilities of the company in relation to the property

Depending upon the specific facts and circumstances (including the profile of the particular taxpayer), a taxpayer