Whiteacre Pty Ltd purchased land for $50,000 on 18 August 1985. At the time of purchasing the land the

company intended to build and operate a supermarket on the site. Building was commenced in 1990 but

the builder was declared bankrupt and did not complete the work. For several years the site remained

untouched as Whiteacre Pty Ltd did not have the funds to complete the project. On 1 January 2019, 100%

of the shares in Whiteacre Pty Ltd were sold to a land development company for $600,000 (which was the

value of the land held by Whiteacre Pty Ltd).

Whiteacre Pty Ltd continued under the control of the new shareholders and developed the land (after

seeking and receiving a new development approval). It completed the development of 20 industrial

buildings which were all sold separately in the current tax year for a total of $2,800,000, after incurring

construction costs of $800,000.

Required:

Advise the original shareholders and Whiteacre Pty Ltd in relation to the above facts.

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