Private ruling: GST - sale of farmland
Date of advice: 2 September 2025
Published: 27 October 2025
Ruling period: DDMMYYYY to DDMMYYYY
Date scheme commenced: DDMMYYYY

Ruling: Q1: Will you, Entity A, be making a GST-free supply of farm land pursuant to section 38-480 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you sell the Subdivided Lots? | A1: Yes, your supplies of the Subdivided Lots will be GST-free supplies of farm land provided that the recipient(s) of your supplies intends to carry on a farming business on the land. | Q2: If your sales of the Subdivided Lots are not GST-free pursuant to section 38-480 of the GST Act, will you be making a taxable supply pursuant to section 9-5 of the GST Act when you sell each of the Subdivided Lots? | A2: Yes. | Q3: If the answer to Question 2 is yes, are you eligible to apply the margin scheme provisions contained in Division 75 of the GST Act to calculate the GST liability? | A3: Yes, you will be eligible to apply the margin scheme under Division 75 if you are making a taxable supply of the Subdivided Lots, provided that you and the recipient(s) enter into a written agreement that the margin scheme is to apply on or before the date of the supply or within such further period as the Commissioner allows.

Relevant facts and circumstances: The taxpayer (You) is carrying on a farming enterprise. The taxpayer has been registered for GST since DDMMYYYY. You own farming properties, described as Property A and Property B. You have subdivided numbered parcels of land off a portion of Property A and Property B for the purpose of sale. Numbered parcels of land were subdivided from Property A, and numbered parcel of land was subdivided from Property B (the Subdivided Lots). Property A At the time of purchase, the land was vacant farming land. Since acquiring Property A, the land has been used to run your farming enterprise. You continued operating the farming on the land during the subdivision process. Other than the subdivision that created the numbered subdivided lots for sale, no other improvements or developments have been carried out on this property during the time of your ownership. The subdivided Lots are described as 'Lot 2' and 'Lot 3' in the subdivision plan for Property A. You will continue to carry on farming on Lots 2 and 3 up until the sale of the land. Property B When you acquired property B: • the land was vacant farming land • the Vendor, Entity A, was not your associate • you were not a member of a GST group with the Vendor • you were not a participant in a GST joint venture with the Vendor • the sale to you was not a sale of a going concern • the sale to you was not a GST-free supply of farmland. Since acquiring Property B, the land has been used to run your farming enterprise. You continued operating farming on the land during the subdivision process. Other than the subdivision, no other improvements or developments have been caried out on this property during the time of your ownership. As part of the subdivision, there was a boundary realignment on the original parcel of land. The subdivided lot is described as 'Lot 1' in the subdivision plan for Property B. You will continue to carry on farming on Lot 1 up until the sale of the land. The rest of the land that was previously part of Lot 1 has been renamed to Lot 2 (next to Lot 1) and is not available for sale. The Subdivided Lots are currently advertised on website, with Lot 2 and Lot 3 listed under a single listing. As of today, the Subdivided Lots are currently under offer. The sale prices of the Subdivided Lots listed on the individual contracts are as follows: • Lot 1: $amount • Lot 2: $amount • Lot 3: $amount. The settlement dates of the Subdivided Lots are as follows: • Lot 1: DDMMYYYY • Lot 2: DDMMYYYY • Lot 3: DDMMYYYY. The Subdivided Lots will not be sold as part of a GST-free supply of a going concern.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 38-375 | A New Tax System (Goods and Services Tax) Act 1999 section 38-480 | A New Tax System (Goods and Services Tax) Act 1999 section 75-5 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Summary: Section 38-480 provides that the supply of a freehold interest in 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 defined in subsection 38-475(2) as including a business of maintaining animals for the purpose of selling them or their bodily produce (including natural increase). Based on the facts of the case, we are satisfied that you are operating farming on the Subdivided Lots, which satisfies as a farming business pursuant to paragraph 38-475(2)(b). Issue 6.2.2 of the Goods and Services Tax Industry Issues Primary Production Industry Partnership - Sale of farmland - Section 38-480 (Primary Production Industry Partnership - issue register) discusses that the term 'carrying on' an enterprise as defined in section 195-1, includes doing anything in the course of the commencement or termination of the enterprise. Issue 6.2.2 continues stating the term 'preceding' is not defined for GST purposes and according to the Macquarie Concise Dictionary, 'precede' means 'to go before'. Therefore, the reference to at least the period of 5 years preceding the supply in section 38-480 means the period of 5 years immediately before the supply of the land. Consequently, a sale would not be GST-free in circumstances where the farming business had been carried on for a five year period, but not continued preceding the sale. In your case, from the date of your purchase of both Property A and Property B in year and year respectively, both properties have been used to carry on a farming business. You will continue to carry on your farming enterprise on the Subdivided Lots up until the sale of the land. As such, when you sell the Subdivided Lots, paragraph 38-480(a) will be satisfied. This is provided that the recipient of the supply (the purchaser) intends for the farm land to be used to carry on a farming business. Issue 6.2.4 of the Primary Production Industry Partnership - issue register discusses what, if any, documentary evidence is necessary to show that the intention of a purchaser of farmland is that the farmland is to be used to carry on a farming business. It states the following: The vendor should seek evidence to demonstrate that a reasonable enquiry has been made about the purchaser's intention. What is reasonable will depend on all the circumstances. Usually this will require the vendor to ask the purchaser whether or not there is an intention to carry on a farming business. The important factor to consider, in determining whether a supply of farm land is GST-free under section 38-480 of the GST Act, is the use of the land as opposed to the ownership of it. Therefore, the recipient of the supply need only intend that a farming business be carried on, on the land. Paragraph 38-480(b) does not require purchasers to carry on the farming business themselves. In most cases, if the vendor obtains a written statement or warranty from the purchaser stating the intention is that a farming business be carried on, then the vendor will be able to demonstrate that it has made a reasonable enquiry about the purchaser's intention, unless the vendor has reason to believe the information is incorrect. In a situation where the recipient(s) of the Subdivided Lots intends that the Subdivided Lots be used to carry on a farming business, paragraph 38-480(b) will also be satisfied and your supply of the Subdivided Lots will be GST-free pursuant to section 38-480. Section 9-40 provides that you are liable for GST on any taxable supplies that you make. Under section 9-5, you make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with the indirect tax zone (Australia); and (d) you are *registered or *required to be registered for GST. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input-taxed. Division 38 and 40 provide for certain supplies to be GST-free and input taxed respectively. In this instance, there are no provisions in the GST Act under which the sales of the Subdivided Lots will be input taxed. Additionally, if the Subdivided Lots are not sold as GST-free farm land under section 38-480 or as subdivided farm landto an associate under section 38-375, there are no other provisions in the GST Act under which your sales will be GST-free. This means your supplies will be taxable if the requirements specified in paragraphs 9-5(a) to (d) are satisfied. Based on the information provided, the sale of the Subdivided Lots will be made for consideration, the sale will be in the course or furtherance of your farming enterprise, the sale is connected with the indirect tax zone as the Subdivided Lots are in Australia, and you are registered for GST. As all elements under section 9-5 will be satisfied, if the sales of the Subdivided Lots are not GST-free under section 38-480, the sales will be taxable supplies and GST will be payable on the supplies. Division 75 allows an entity to calculate the GST payable on the supply of real property under the margin scheme where the relevant requirements are met. Subsection 75-5(1) provides that the margin scheme applies in working out the amount of GST on a taxable supply of real property that you make by: • selling a freehold interest in land; or • selling a stratum unit; or • granting or selling a long-term lease; if you and the recipient of the supply have agreed in writing that the margin scheme is to apply. Subsection 75-5(1A) provides that the written agreement must be made on or before making the supply or within such further period as the Commissioner allows. However, subsection 75-5(2) provides that the margin scheme does not apply if the entity acquired the entire freehold interest, stratum unit or long-term lease through a supply that was ineligible for the margin scheme. Subsection 75-5(3) lists the circumstances which make a supply ineligible for the margin scheme. A supply is ineligible for the margin scheme if: a) it is a *taxable supply on which the GST was worked out without applying the *margin scheme; or b) it is a supply of a thing you acquired by *inheriting it from a deceased person, and the deceased person had acquired all of it through a supply that was ineligible for the margin scheme; or c) it is a supply in relation to which all of the following apply: i. you were a * member of a *GST group at the time you acquired the interest, unit or lease in question; ii. the entity from whom you acquired it was a member of the GST group at that time; iii. the last supply of the interest, unit or lease by an entity who was not (at the time of that supply) a member of the GST group to an entity who was (at that time) such a member was a supply that was ineligible for the margin scheme; or d) it is a supply in relation to which both of the following apply: i. you acquired the interest, unit or lease from the *joint venture operator of a *GST joint venture at a time when you were a *participant in the joint venture; ii. the joint venture operator had acquired the interest, unit or lease through a supply that was ineligible for the margin scheme; or e) it is a supply in relation to which all of the following apply: i. you acquired the interest, unit or lease from an entity as, or as part of, a *supply of a going concern to you that was *GST-free under Subdivision 38-J; ii. the entity was * registered or * required to be registered, at the time of the acquisition; iii. the entity had acquired the entire interest, unit or lease through a taxable supply on which the GST was worked out without applying the margin scheme; or f) it is a supply in relation to which all of the following apply: i. you acquired the interest, unit or lease from an entity as, or as part of, a supply to you that was GST-free under Subdivision 38-O; ii. the entity was registered or required to be registered, at the time of the acquisition; iii. the entity had acquired the entire interest, unit or lease through a taxable supply on which the GST was worked out without applying the margin scheme; or g) it is a supply in relation to which all of the following apply: i. you acquired the interest, unit or lease from an entity who was your *associate, and who was registered or required to be registered, at the time of the acquisition; ii. the acquisition from your associate was without *consideration; iii. the supply by your associate was not a *taxable supply; iv. your associate made the supply in the course or furtherance of an *enterprise that your associate *carried on; v. your associate had acquired the entire interest, unit or lease through a taxable supply on which the GST was worked out without applying the margin scheme. In your case, with reference to Property A, you did not acquire Property A through a supply that was ineligible for the margin scheme as Property A was sold to you pre-GST in year and no GST was included at the time of your purchase. With reference to Property B, the sale contract for Property B provides that the supply was for vacant land and you did not acquire Property B: • from an associate • from a fellow GST group member • from a fellow participant in a GST joint venture • as a GST-free supply (either as part of a going concern or farmland). Consequently, the provisions on ineligibility to apply the margin scheme in subsections 75-5(2) and (3) do not apply to your sale of the Subdivided Lots. Providing you and the recipient(s) of the supplies enter into a written agreement that the margin scheme is to apply on or before the date of the supply, or within such further period as the Commissioner allows, you will be eligible to apply the margin scheme under Division 75, to the sale of the Subdivided Lots.