Private ruling: Good and services tax (GST) property settlement
Date of advice: 8 November 2018
Published: February 2019
Ruling period: Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the sale of the lots of land be a taxable supply for GST purposes? | A1: No. 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. Having applied all the principles in MT 2006/1 to the present circumstances, we conclude that the sale of your property, does not amount to an enterprise for GST purposes. 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: ● your activity of selling land does not constitute the carrying on an enterprise; and ● you are neither registered nor required to be registered for GST. The sale of the property will be regarded as the mere realisation of a capital asset.

Relevant facts and circumstances: When your parents passed away in they left their property to you. The property consisted of a number of lots on the same title. There was no subdivision. You provided the value of the lots at acquisition. You provided the total size of the lots at acquisition. You renovated the dwelling and rented it out from for more than five years. For about a year the lots were listed for sale with a real estate agent. You had few offers on the lots but they were not satisfactory. You couldn’t find anyone who would purchase the lots together. Later, as the house aged and became uninhabitable it was demolished. The land was cleared so that individual blocks could be sold. You used several entities to prepare the lots and provided the total cost. The lots have been listed for sale privately since then. You have provided the estimate value of each lot. The lots have not been rezoned. You are not 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 section 9-20 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1