Private ruling: the sales of subdivided land
Date of advice: 18 December 2014
Published: December 2016

Ruling: Q1: 1. Are you carrying on an enterprise and required to be registered for goods and services tax (GST) in relation to the sales of the subdivided lots of land? 2. If yes to question 1, are you making taxable supplies on the sales of the subdivided lots of land? | A1: 1. No. You are not carrying on an enterprise and are not required to be registered for GST in relation to the sales of the subdivided lots of land. 2. No. You are not making taxable supplies in relation to sales of the subdivided lots of land. Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you make a taxable supply if: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with 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 Based on the information provided, your subdividing and selling 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 activities of subdividing and selling of the subdivided lots of land do not constitute the carrying on of an enterprise, and (ii) you are neither registered nor required to be registered for GST. Accordingly, 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, and are not taxable.


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


Relevant facts: You are two individuals who are not registered for goods and services tax (GST) as individuals or as a partnership. You jointly own real property. | You acquired a property prior to 2000.The area of the property was many acres. At the time, improvements on the property included a house and stables. | You occupied the house on the property as your principal place of residence since your acquisition of the property. The property was used to accommodate your lifestyle choice and not as means of deriving income. | You initially divided the land into two allotments, referred to as allotment A and allotment B. | You subdivided allotment A into seven new lots of land. Six lots of land were normal size building lots, while the seventh lot is a larger. You were planning to construct a dwelling and reside on the seventh lot. | You have serious health issues and your health is deteriorating further. Your medical adviser advised you that your medical condition will not improve but will become more debilitating with time. With age and serious health issues, you are not able to construct a new dwelling for your residence on the lot 7. Therefore, you have decided to purchase an established house as your residence. | In order to finance for the purchase of the established house, to fund your retirement and to finance your ongoing high medical costs, you are planning to subdivide lot 7 into a further 5 lots and offer them to sale to the general public. | A minimal amount of work will be undertaken in order to prepare the subdivision of the land for sale. The only work to be undertaken will be done to secure the council approval for the subdivision of the land. There are no buildings on the new subdivided lots of land that are for sale. | You advise that the disposal of subdivided lots of land had not been conducted in the manner of an enterprise but rather in the manner necessary for you to fund your retirement and accommodation needs. | There is no change of purpose or object for which the land is held. | The level of activities undertaken for the subdivision will be minimal development work to meet the council requirements. | The property has not been used to conduct a business. There are no buildings on lot 7 which will be subdivided. The vacant land was always used by you for private purpose. You have not carried out any business on the vacant land. | You do not have a documented business plan, and there is no organisation set-up for the subdivision and sales of the lots of land. | You have not accounted for the property as a business asset or expense. You have not claimed any deductions for the purchase of the property or any subdivision costs for income tax purposes.