Private ruling: GST and the supply of farmland
Published: May 2015

Ruling: Q1: Will the supply of the Land by Entity A to Entity B, 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: Entity A registered for GST. It has a freehold interest in land located in Australia, (the Land). The Land forms part of a larger farming property. A cattle farming business has been carried out on the Land for at least 5 years. Entity A entered into a contract to sell the freehold interest in the Land to Entity B. Entity B will allow the farming business to be carried on after settlement of the Contract under an informal arrangement. There are no residential premises located on the land.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 38-475 and | A New Tax System (Goods and Services Tax) Act 1999 Section 38-480.

Reasons for decision: Summary: • all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) • all reference materials referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au • all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act Section 38-480 provides that: The supply of a freehold interest in, or lease by an Australian government agency of or the long term lease of, land is GST-free if: a. The land is land on which a farming business has been carried on for at least the period of 5 years preceding the supply; and b. The recipient of the supply intends that a farming business be carried on, on the land. The term farming business is relevantly defined in sub-section 38-475(2) maintaining animals for the purpose of selling them or their bodily produce (including natural increase). The Land will be sold freehold Is land on which a farming business has been carried on for at least the period of 5 years preceding the supply and The recipient of the supply intends that a farming business will be carried on after settlement. Therefore the supply of the Land by Entity A to Entity B will be GST-free pursuant to section 38-480.