Private ruling: GST and the sale of property
Date of advice: 18 April 2016
Published: June 2016

Ruling: Q1: Is goods and services tax (GST) payable on the sale of some blocks of land that have been created by subdividing your Property? | A1: No, GST is not payable on the sale of some blocks of land that have been created by subdividing your Property for the following reasons. GST is payable on taxable supplies. Amongst other things, a taxable supply is a supply made in the course of an enterprise that one carries on. We are of the view that the subdivision of the property and the subsequent sale of the newly created lots are not made in the course of an enterprise that you carry on. Accordingly, the sale of the newly created blocks is not considered as a taxable supply and as such GST is not payable.

Relevant facts and circumstances: You purchased a property (Property) some time ago. A house was located on the Property. The Property was purchased for private purposes, with you using the house on the Property as your main residence since it was purchased. You have not been carrying on any enterprises on the Property. You intend subdividing the Property and selling the new blocks due to personal reasons. The Property is currently zoned General Residential. You engaged the services of a surveyor to prepare a planning permit and an estimate of the costs for the subdivision. The Surveyor provided estimated costs for the subdivision of the Property into a number of subdivided blocks. It is your intention to keep the subdivided block on which the house is located (Block 1), and sell the remaining subdivided blocks which are estimated to be put on the market. You will obtain a bank loan to pay for the subdivision. You do not have any plans to undertake any similar activities in the future.

Relevant legislative provisions: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 9-20 of the A New Tax System (Goods and Services Tax) Act 1999