Private ruling: GST and farmland
Date of advice: 30 November 2018
Published: March 2019

Ruling: Q1: Is the sale of the land by you a sale that falls within the GST-free farmland exemption? | A1: Yes. The sale of the land by you is a sale that falls within the GST-free farmland exemption under section 38-480 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). This is because the requirements under section 38-480 of the GST Act are considered satisfied in your circumstances.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. ● You are a partnership and you conduct an enterprise of livestock rearing. That enterprise was previously carried on by a partner in the partnership in his own right but is now conducted by the partnership. ● The enterprise has been established over many years. ● The partnership generally runs somewhere slightly in excess of ‘X amount’ of head of livestock. The partnership traditionally runs cattle on leased land that you are able to rent in and around the area. ● The cornerstone of the grazing enterprise is the leasing of farmland which enables the partnership to produce beef and make a profit. The bulk of the livestock are run on leased land. The partnership’s sale of land ● The partnership owns land and has entered into a contract to sell a small part of their land (the Land). A copy of that contract in draft form (the contract) has been submitted with your private ruling application and which is the contractual document on which this private ruling is based. As advised, you intend to execute and formalise the contract upon receipt of this private ruling. ● There has been a farming business that involves livestock rearing carried out on the Land being sold for at least the last five years. ● The Land is being sold by you to pay bank debt. ● The purchasers are arms-length purchasers. ● A key condition of the sale under the contract is that you are to be given a lease by the buyers of the land to continue to run your livestock on the property. ● The special conditions in the contract provide, amongst other things, that: ○ the Seller warrants that a farming business has been carried on on, the Land for more than five (5) years before the Contract Date and the farming business will continue on the Land up to the Settlement Date, and ○ the Buyer warrants that, on and after Settlement, a farming business will be carried on on the Land.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 38-480