Private ruling: GST and the sales of subdivided lots of land
Date of advice: 28 June 2017
Published: October 2017

Ruling: Q1: Are the sales of the subdivided lots of land by you subject to goods and services tax (GST)? | A1: No, the sales of the subdivided lots of land are not subject to GST. GST is payable on a taxable supply. You make a taxable supply if all the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied as follows: (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, a supply is not a taxable supply to the extent that it is GST-free or input taxed. The supply of the sales of the subdivided lots of land will be taxable if it meets all the requirements in section 9-5 of the GST Act. Based on the information provided, your sales of the subdivided lots of land do not satisfy all the requirements of a taxable supply under section 9-5 of the GST Act because: (i) your activity of selling land does not constitute the carrying on an enterprise; and (ii) you are neither registered nor required to be registered for GST. Accordingly, your sales of the subdivided lots of land are not a taxable supply and are not subject to GST.

Relevant facts and circumstances: You own a property in Australia. You are not registered for goods and services tax (GST). You acquired the property with the intention of constructing a dwelling and then moving in the property. GST was not included in the price. There are no structures of any kind on the land nor has there been in the past. After acquiring the property, you acquired another property with an existing house which you renovated and moved into it. The property has remained vacant during the period of your ownership. There is no income derived from holding the land. You have been attempting to sell the block as a single lot since XXX. Due to other properties in the area being substantially smaller in size, you were instructed by the agent to offer the block for sale as two smaller subdivided lots. You remained hopeful that the block could be sold as a single block. You have not claimed any deductions for the purchase of the property or any subdivision costs for income tax purposes. There is no business plan for the subdivision of the land as this is not being done as a business or enterprise. The level of activities undertaken for the subdivision is minimal development work to meet the council requirements. There are no buildings on the new subdivided lots of land that are for sale. The vacant land was always used by you for private purpose. You have not carried out any business on the vacant land. To sell the land, you have commenced activities to subdivide the land into two lots. The subdivision work has not yet been completed. You have received an offer from a prospective purchaser for one of the subdivided lots for $XXX,XXX.

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 9-25 | A New Tax System (Goods and Services Tax) Act 1999, section 23-5 | A New Tax System (Goods and Services Tax) Act 1999, section 40-40