Private ruling: GST and the sale of property
Published: June 2015

Ruling: Q1: Are you making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you sell the Property? | A1: No. The requirements of a taxable supply include that you are registered or required to be registered for GST. You are carrying on a residential leasing enterprise on the Property. We do not consider your activities in relation to obtaining the development approvals and selling the Property amount to an enterprise in their own right. The sale of the Property constitutes the transfer of ownership of a capital asset for the purposes of section 188-25 of the GST Act and will be disregarded when calculating your projected GST turnover. As the rent received from your input taxed supplies of residential premises and the value of the transfer of the Property are excluded from the calculation of your GST turnover, you are not required to be registered for GST pursuant to section 23-5 of the GST Act. Therefore, you are not making a taxable supply when you sell the Property and there will be no GST.

Relevant facts and circumstances: You are not registered for GST. You have entered into a Contract for sale of land (contract) with the Purchaser to sell the Property. You and your late spouse purchased the Property in 19XX. The Property contained an old weatherboard house and a total land area of X ha. In 19XX a new house was built on the Property and became the primary residence. In 20XX your spouse passed away and their interest in the Property passed to you. You moved off the Property to a new primary residence in town and commenced renting out both of the houses. Both houses are tenanted. In 20XX development approval was obtained for the Property to be sub divided into X lots. In 20XX you obtained a modified development consent in relation to the previous development approval for the Property to be subdivided into X lots together with a boundary adjustment. Subsequent to the approval of the modified development consent the local council resumed part of the land which had a boundary with the road and developed this part of the Property. This included installing kerbing, guttering and a footpath. You have provided a diagram of the subdivision. In 20XX you obtained a Planning Certificate. You have been trying to sell the Property for around X years and have engaged various organisations to develop the initial and subsequent development applications. You have also engaged realtors to market the Property. The costs incurred have not been recouped. The land has not been treated as a business asset. Nothing further has been done to the land. You had a coherent plan for the sale of the land to the extent that you have engaged organisations to prepare the development applications, lodged and obtained development approvals and engaged real estate agents to market and sell the land. There is no other business organisation. You have not borrowed any money.

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 Subsection 9-40 | A New Tax System (Goods and Services Tax) Act 1999 Section 23-5, and | A New Tax System (Goods and Services Tax) Act 1999 Division 188.