Private ruling: GST and grant of an easement
Date of advice: 26 July 2023
Published: 11 September 2023

Ruling: Q1: Are you liable to pay GST on the payment that you have received from your neighbour for granting an easement over your property (the property)? | A1: No. You are liable to pay GST on any taxable supplies that you make. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if the supply meets all the following requirements: • you make the supply for consideration • the supply is made in the course or furtherance of an enterprise that you carry on • the supply is connected with Australia, and • you are registered, or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. Based on the information that you have provided, we consider that the grant of the easement over the Property is not a supply made in the course or furtherance of an enterprise that you carry on. Therefore, the grant of the easement is not a taxable supply as it does not meet all the requirements of section 9-5 of the GST Act. Accordingly, you are not liable to pay GST on the grant of the easement.

Relevant facts and circumstances: The Property has been your principal place of residence since 19XX. You have not used any part of the property in the course of a business/enterprise. The owners of the adjoining property are planning to subdivide and construct new buildings on their property. In order to meet the requirements, they needed access to part of your property. You negotiated with the neighbours and entered into a contract on a specified date. The contract grants access for an easement to run through your land along the side boundary of the Property in return for a compensation amount of $X. The $X is a one-off payment. You will not receive any other payments in relation the grant of the easement. The easement was registered on the title on a specified date, and it is now a permanent feature of the Property. You are not registered for GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5