Private ruling: GST and supply of property
Date of advice: 26 October 2023
Published: 11 December 2023
Ruling period: 1 July 2023 till quarter ending 30 June 2024
Date scheme commenced: 1 July 2023

Ruling: Q1: Is the supply by the Vendor to the Buyer of the vacant land (Lot Y) under the Contract of sale a taxable supply under section 9-5 of the A New Tax System (Goods and services Tax) Act 1999 (GST Act)? | A1: No, the supply by the Vendor is not a taxable supply. Under section 9-40 of the GST Act, you are liable to pay GST on any taxable supply that you make. Section 9-5 of the GST Act provides that you make a taxable supply if: (a) you make the supply for consideration (b) the supply is made in the course or furtherance of an enterprise that you carry on (c) the supply is connected with the indirect tax zone (Australia) and (d) you are registered, or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. In this case the Vendor will not satisfy section 9-5 of the GST Act as paragraph 9-5(b) and/or paragraph 9-5(d) of the GST Act is not met. On this basis the Vendor is not liable for GST on the supply of Lot Y.

Relevant facts and circumstances: The Vendor is a non-resident individual and is not employed in Australia. In 20XX the Vendor acquired a property a Seller under the Original Contract. Pursuant to the Original Contract, the Vendor purchased a property (Property) for consideration. At the time of acquiring the property under the Original Contract it included a main residence, a demountable home, a hall and a shed. Over the course of owning the property its use by the Vendor has not been for commercial/business purposes. The Vendor originally purchased the property as a residential premises for himself when he visited Australia and had a longer-term vision of donating the property. However, in recent years, with increasing costs to manage the residential home the Vendor has made numerous attempts to sell the property. The Vendor had been having trouble selling the property as a single lot and was advised that, if it was subdivided, the property might be easier to sell. The Vendor obtained approval to subdivide the property and consequently three of the lots created (Lot X, Lot Y and Lot Z) are vacant land. Except for the property acquired under the Original Contract, which was subsequently subdivided in accordance with the above facts, and a residential apartment that has been sold, the Vendor has not held any other property in Australia and has not carried out any other development activities in respect of property in Australia. The Vendor entered into a contract of sale with the Buyer to sell Lot Y for consideration. The Vendor is not registered with an ABN, nor is he registered for GST.

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 paragraph 9-5(b) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-5(d) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 188-25