Private ruling: GST and property subdivision activities
Published: December 2014

Ruling: Q1: Is the sale of the subdivided lots located on your property in Australia a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. The requirements of making a taxable supply include that the supply is made in the course or furtherance of an enterprise that you carry on and that you are registered or required to be registered for GST. We consider that you are not carrying on an 'enterprise' as defined in section 9-20 of the GST Act in regard to your subdivision activities. You are neither registered nor required to be registered for GST pursuant section 23-5 of the GST Act.

Relevant facts and circumstances: You, individual A and individual B are not registered for GST. You acquired a property as joint tenants a number of years ago. You lived in a house located on the property and you do not and have not, used the property for any other purpose than your personal residence. Recently the local council rezoned the area which allowed smaller lots to be sold for residential purposes. You have a large personal debt which you wish to reduce and approached your local council, requesting subdivision approval. You lodged a request for development approval with the council to subdivide the property into x community title rural residential lots and one community association lot. You received confirmation of subdivision approval. Approximately half the property cannot be developed as it is on sloping land. The council advised that houses may not be built there as it is considered a high risk fire danger in the event of bush fires from the valley below This area has been classified as a 'Dedicated Green Space' and will not be opened up for development unless there is a change in the law which is considered very remote. You supplied a copy of the plan of the approved subdivision showing the lots and the area that can't be developed. You will only be doing the minimum amount required by council to meet their requirements for the subdivision. As shown on the plan you are required to create roadway access with curbing and footpath meeting the requirements set out in the subdivision approval. The Dedicated Green Space is required to have certain fencing and measures in place to reserve its integrity. You do not intend to borrow any funds for the development but if you have to you will not claim the interest as a business expense. You have not undertaken a development of this type before. No buildings will be erected on the site. You will continue to live in the house that was on the property when you first acquired it and the balance of the lots except for the Dedicated Green Space will be sold off.

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 9-40 and | A New Tax System (Goods and Services Tax) Act 1999 Section 9-23.