Private ruling: GST and the sale of vacant land
Date of advice: 7 October 2015
Published: November 2015

Ruling: Q1: Will your supplies of the subdivided vacant lots of land (the Lots) be taxable supplies? | A1: No. The requirements for making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) include that the supply is made in the course or furtherance of an enterprise that you carry on and that you are registered or required to be registered for GST. We consider that you are not carrying on an 'enterprise' as defined in section 9-20 of the GST Act and you are neither registered nor required to be registered for GST in regard to your activities relating to the sale of the Lots. Therefore, your supplies of the subdivided vacant lots of land (the Lots) will not be taxable supplies.

Relevant facts and circumstances: You are not registered for GST. You jointly own the Property. You purchased the Property in 20XX. The size of the Property is X acres. There were no buildings or structures on the Property when you purchased it. You built your private residence on the Property. You have used the Property for recreation purposes. The property has never been used for any type of business activity. You have subdivided the Property into X lots, a lot with your primary residence, and X separate lots. You will sell the blocks and maintain your primary residence. You have subdivided the Property with the purpose of retaining your family home and selling part of the land thereby reducing the amount of work required to maintain the Property. Your intention is to use the proceeds of the sales to finance your living expenses during retirement. You have not previously been involved in any development or subdivision activities. The subdivision has been completed to the minimum standard required by council. This required you to extend the sewerage and gas to the lots and insert cross-overs. You employed a civil engineer and surveyor to assist with the subdivision. You have used your savings to finance the cost of subdivision. You have not claimed the expenses of the subdivision in your income tax return.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 9-20 | A New Tax System (Goods and Services Tax) Act 1999 Section 9-40, and | A New Tax System (Goods and Services Tax) Act 1999 Section 23-5.