Private ruling: GST and farmland
Date of advice: 5 January 2018
Published: May 2018

Ruling: Q1: Is the sale of the Properties (defined below) a GST-free supply under section 38-480 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes.

Relevant facts and circumstances: Specified entity is the owner of the specified properties (“the Properties”). The Company is registered for GST. All of the Properties with the exception of specified property are currently vacant blocks of land. There is currently a residential dwelling situated on specified property. The dwelling is rented out. The Properties have been used exclusively on a continuous and ongoing basis for primary production in the form of cattle farming for the last specified period. In respect to specified property, despite the lot having a residential dwelling situated on it, the overwhelming majority of the land area (specified number) on the lot will also continue to be utilised for primary production. The Company was put into voluntary liquidation on a specified date to achieve an intergenerational rural land transfer for family succession planning purposes. Whilst the Company has been in liquidation the property has been farmed by the specified entity in exactly the same manner as what the Company was doing on a continuing and ongoing basis at its maximum carrying capacity for cattle farming purposes. The Company sold all its equipment to the specified entity sometime between specified date and specified date. The Properties are used in conjunction with other properties owned by specified entity. On specified date specified entity was appointed as liquidator to the Company. The Company sold the Properties to a purchaser on the specified date. The sale settled on a specified date. The Properties comprise land on which a farming business has been carried on for at least the period of five years preceding the supply. It is the intention of the purchaser to continue to utilise the land for the grazing of livestock and farming activities.

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

Reasons for decision: Summary: In this ruling, please note: ● All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise specified. ● All terms marked by an *asterisk are defined terms in the GST Act. Section 38-480 provides that the supply of a freehold interest in land is GST-free if: ● the land is land on which a farming business has been carried on for at least the period of five years preceding the supply; and ● the recipient of the supply intends that a farming business be carried on, on the land. A ‘farming business’ is defined to include maintaining animals for the purpose of selling them or their bodily produce (including natural increase). The land is land on which a farming business has been carried on for at least the period of five years preceding the supply. In addition, the purchaser intends to maintain animals for the purpose of selling them or their bodily produce (including natural increase). As a result, all of the requirements of section 38-480 have been met. Therefore, the Company is making a GST-free supply under section 38-480 when they sell the Properties.