Private ruling: GST and the subdivision of land
Date of advice: 16 October 2015
Published: October 2015

Ruling: Q1: Will the sale of your interest in the Property be a taxable supply? | A1: No. The requirements for making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) include that the supply is made in the course or furtherance of an enterprise that you carry on. We do not consider the sale of your interest in the Property to be in the course of your enterprise. Nor do we consider your activities in relation to the subdivision and sale of the Property amount to carrying on an 'enterprise' as defined in section 9-20 of the GST Act. Therefore, the sale of your interest in the Property will not be a taxable supply.

Relevant facts and circumstances: You are registered for GST as you carry on an enterprise. You are a joint owner in the Property. You purchased the Property in 19XX with family members Group A and Group B (the Owners). Group B moved into the existing house (House 1) on the Property in 19XX and have lived there since. Group A built a second house (House 2) on the Property in 19XX and have lived there since. You purchased your interest in the Property with the intention to build a house to live in however you were not able to do this due to Council restrictions. The entire Property has only been used for residential and private use. The Property has never been used in conjunction with your enterprise or any other business. The Owners do not have the expertise to comply with Council requirements to develop the Land and will be using the services of a Developer. The Developer will organise the complete development, finance, and sales of lots to recoup costs. The Owners will be guided by the Developer as to the most effective way to develop the land, cover the costs and provide the House 1 and House 2 to their respective owners. The Owners will not be entering into any construction / development outside the minimum requirements of the Council for subdivision approval. You have not developed land previously.

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