Private ruling: GST and sale of vacant land
Published: April 2014

Ruling: Q1: Will the goods and services tax (GST) apply to your sale of the vacant land which is located in Australia? | A1: No. GST will not apply to your sale of the vacant land which is located in Australia. The definition of an 'enterprise' in subsection 9-20(1) of the A New Tax System (Goods and Services Tax) Act 1999 ( GST Act) includes (amongst other things) an activity or series of activities done in the form of an adventure or concern in the nature of trade. Goods and Services Tax Determination GSTD 2006/6 and Miscellaneous Taxation Ruling MT 2006/1 explain that the mere disposal of a private asset does not amount to trade where the private asset was purchased with intention of being enjoyed by the person. Based on the information received, you purchased the vacant land with the intention to build a house on it for your private purposes and have not carried on any business activity on the vacant land. In this instance you are holding the vacant land as a private asset and the disposal of the private asset will not amount to trade for GST purposes. Accordingly, you will not be selling the vacant land in the course of an enterprise under paragraph 9-5(b) of the GST Act.

Relevant facts and circumstances: You have bought a vacant land located in Australia nine years ago. You bought the land with the intention of building a home on the land and moved there. However circumstances have now changed and you have decided to stay where you are and sell the vacant land. Since you purchased the property no business activity has been carried on the vacant land and no improvements have been made on the land since the purchase.

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