Private ruling: Sale of vacant land
Date of advice: 1 March 2017
Published: August 2017

Ruling: Q1: Is the sale of your vacant land under a standard land contract a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, provided the contract of sale does not contradict any of the facts as presented below, the sale of your vacant land which will be made under a standard land contract is not a taxable supply. The sale is private and domestic in nature and is not made in the course of furtherance of an enterprise that you are carrying on.

Relevant facts and circumstances: You were gifted a XX% portion of a parcel of vacant land by your parents. Your sibling was also gifted a XX% portion at the same time. The remaining YY% portion was held by your parents. The total parcel of vacant land is approximately X.X hectares. Your parents are now deceased, your XX many years ago and your XY recently. Under the terms of their will, the YY% portion of the vacant land held by your parents was inherited by you and your sibling resulting in you now holding YY% of this parcel of vacant land and your sibling the remaining YY%. The vacant land has always been vacant and has not been used for income producing activities. A property developer (purchaser) has offered to purchase the vacant land from you to subdivide it for residential use. The sale will be made under a standard land contract for the market value of the vacant land. The sale price of the vacant land will not be increased by or reduced by any proportion of the development activities of the intending purchaser. The sale price of the vacant land will only reflect the market price of the vacant land at the time of the sale in its current state and will not take into account any development/improvement that the purchaser or any other entity will be undertaking on it. You are registered for GST in your own personal name. The ABN and GST registration are for the purposes of commercial rental property income, namely two commercial factory units which receive rent. There are no other business activities undertaken under the ABN. You have always and continue to view the vacant land as a private asset and not in connection with your commercial rental property enterprise.

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