Private ruling: GST and the sale of farmland
Date of advice: 14 February 2018
Published: June 2018

Ruling: Q1: Will your supply of the portion of your property located in Australia, be a GST free supply pursuant to section 38-480 of the A New Tax System (Goods and Services Tax) Act 1999 ? | A1: Yes

Relevant facts and circumstances: You are a trust and are registered for GST. You acquired a property on ddmmyyyy. You have operated a dairy farming business continuously on the property since you acquired it. The property contains a house and land on which the dairy farm is operated. You have subdivided off a section of the property. This area of the property contains the house and some of the farmland. You plan to sell this piece of land to a purchaser who will live in the house and operate a farming business on the land from the date of purchase. The purchaser will be registered for GST on the settlement date.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 34-480

Reasons for decision: Summary: In this reasoning, unless otherwise stated, ● all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) ● all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act A supply of farmland will be GST free under section 38-480 in the following circumstances: ● the land is land on which a farming business has been carried on for the period of at least 5 years preceding the supply and ● the recipient of the supply intends that a farming business be carried on, on the land. “Farming business” is defined in subsection 38-475(2) to include maintaining animals for the purposes of selling them or their bodily produce. A dairy farm meets this definition of farming business. Therefore your supply of the portion of the property will meet the criteria of 38-480 in that: ● You will have carried on a farming business for at least the 5 years preceding settlement date, and ● The recipient of the supply intends that a farming business will be carried on from the date of purchase.