subdividing lots, lifetime capital gains exemption

QUESTION: We subdivided our property into 3 parcels and understand we are required to pay GST on the lots when we sell because we are considered to be developers.
My question is: if we are considered to be developers for GST purchases then are we considered to be a "business" when it comes to the new business lifetime capital gains ruling as outlined in the 2007 budget?

david ingram replies:

The answer is "no".

To be active for the lifetime exemption, it has to be an ongoing and continuous business.

The sale of one or three lots can be subject to GST but if there is no activity after and before, the gain is a capital gain, NOT TAXABLE at straight rates.

Lots of tax cases speak to this. You can find some of them at - click on Tax Guide - in the top left hand box - then click on Capital Gains.