Private ruling: Property and enterprise
Date of advice: 11 August 2025
Published: 27 October 2025
Ruling period: 1 April 2025 to 30 June 2025
Date scheme commenced: 1 April 2025

Ruling: Q1: Is the supply by the Trust (or Vendor) to the Purchaser of the Property a taxable supply under section 9-5 of the A New Tax System (Goods and Services) Tax Act 1999 (GST Act)? | A1: No

Relevant facts and circumstances: A Trust was created around 20YY to acquire property. The trustee of the Trust is xxx. The Trust is not registered for GST and has never previously been registered for GST. The Trust acquired a property for $xxx in 20YY. The Property consists of two separate land titles. Since 20YY both titles have been registered in the name of the trustee. The Property acquired contains a residential premise and adjacent land. The size of the Property is xxx hectares. The Trust purchased the Property as it was an ideal location and the price was affordable. The intention when purchasing the Property was for 'land banking'. It would be held for future potential capital gain with infrequent private use. There was no intention to conduct commercial activity or undertake development activity. An accountant was consulted to establish the Trust, but no other professional advice was sought to acquire the Property. The Trust has not conducted any business activities on the Property or leased it out over the period of its ownership. Minor repairs and maintenance have been undertaken. The zoning of the Property is 'rural' and the Trust has not applied for rezoning. In 20YY the Trust decided to sell the Property. No formal valuations of the Property were obtained during the period of ownership. An informal real estate agent market appraisal was obtained once it was decided that the Property would be sold. In 20YY, the Trust (as Vendor) entered into a contract to sell the Property for $xxx to the Purchaser. Settlement of the Property occurred on DD June 20YY. The Trust does not own other property and has not owned or sold any property previously.

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 9-20

Reasons for decision: Summary: No. The supply of the Property is not a taxable supply as it was not made in the course or furtherance of an enterprise that the Vendor carries on under section 9-20 of the GST Act. | Detailed Reasoning - Detailed reasoning: GST is payable on taxable supplies as per section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Section 9-5 of the GST Act sets out the requirements of a taxable supply and it states: 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; 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. (*denotes a term defined in section 195-1 of the GST Act). All of the requirements of section 9-5 of the GST Act must be satisfied for the sale to be a taxable supply. The sale of the Property satisfies paragraph 9-5(a) and 9-5(c) of the GST Act. That is, the Trustee for the Trust (the Vendor or Trust) makes the supply of the Property for consideration and the supply is connected with the indirect tax zone as the Property is located in Australia. | Detailed Reasoning - Supply in the course or furtherance of an enterprise: The term 'enterprise' for GST purposes is defined in subsection 9-20(1) of the GST Act and states the following: An enterprise is an activity, or series of activities, done: (a) in form of a *business; or (b) in the form of an adventure or concern in the nature of trade; or (c) on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property; or [...] Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian business number (MT 2006/1) contains the Commissioner's view on what constitutes an enterprise for the purposes of eligibility for an Australian Business Number. Goods and Services Tax Determination GSTD 2006/6 Goods and services tax: does MT 2006/1 have equal application to the meaning of 'entity' and 'enterprise' for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (GSTD 2006/6) extends the application of MT 2006/1 to the GST Act. The principles in MT 2006/1 apply equally to the term 'enterprise' and can be relied upon for GST purposes. As per paragraph 128 of MT 2006/1, the establishment of a trust is not the commencement of an enterprise carried on by the trust. This is because the trust cannot commence activities until it is in existence. | Detailed Reasoning - In the form of a business: Paragraphs 177 to 179 of MT 2006/1 discuss the main indicators of carrying on a business, and states: Indicators of a business 177. To determine whether an activity, or series of activities, amounts to a business, the activity needs to be considered against the indicators of a business established by case law. 178. TR 97/11 discusses the main indicators of carrying on a business. Based on that discussion some indicators are: • a significant commercial activity; • a purpose and intention of the taxpayer to engage in commercial activity; • an intention to make a profit from the activity; • the activity is or will be profitable; • the recurrent and regular nature of the activity; • the activity is carried on in a similar manner to that of other businesses in the same or similar trade; • activity is systematic, organised and carried on in a businesslike manner and records are kept; • the activities are of a reasonable size and scale; • a business plan exists; • commercial sales of product; and • the entity has relevant knowledge or skill. 179. There is no single test to determine whether a business is being carried on. Paragraph 12 of TR 97/11 states that 'whilst each case might turn on its own particular facts, the determination of the question is generally the result of a process of weighing all the relevant indicators.' TR 97/11 can be referred to for a fuller discussion on whether a particular activity constitutes the carrying on of a business. Paragraph 180 of MT 2006/1 explains that small scale activities can still constitute an enterprise: Small scale activities 180. An enterprise can be conducted in a small way. The size or scale of the activities, although important, is not the sole test of whether they amount to an enterprise. The larger the scale of the activities the more likely it is that they are an enterprise. However, if the activities are carried on in a small way, other indicators become more important in determining whether they amount to an enterprise. Based on the facts, we do not consider that the Trust is undertaking any activity in the form of a business under paragraph 9-20(1)(a) of the GST Act. As the transaction may be described as 'one-off', we also need to consider whether these activities are in the form of an adventure or concern in the nature of trade. The phrase 'in the form of an adventure or concern in the nature of trade' has a wider interpretation compared to 'in the form of a business'. | Detailed Reasoning - In the form of an adventure or concern in the nature of trade: Paragraph 244 of MT 2006/1 explains that an adventure or concern in the nature of trade includes a commercial activity that does not amount to a business but which has the characteristics of a business deal. Such transactions are revenue in nature. However, the sale of private assets are not, in the absence of other factors, adventures or concerns in the nature of trade. The fact that the asset is sold at a profit does not, of itself, result in the activity being commercial in nature. Paragraph 262 of MT 2006/1 acknowledges that the question of whether an entity is carrying on an enterprise often arises where there are 'one-offs' or isolated real property transactions. Paragraph 263 continues to state that the issue to be decided is whether the activities being conducted are an enterprise in that they are of a revenue nature as they are considered to be activities of carrying on a business or an adventure or concern in the nature of trade (profit making undertaking or scheme) as opposed to a mere realisation of a capital asset. Paragraph 265 of MT 2006/1 establishes a number of factors that provide assistance in determining whether activities are a business or adventure or concern in the nature of trade: These include: • there is a change of purpose for which the land is held; • additional land is acquired to be added to the original parcel of land; • the parcel of land is brought into account as a business asset; • there is a coherent plan for the subdivision of land; • there is a business organisation - for example a manager, office and letterhead; • borrowed funds financed the acquisition or subdivision; • interest on money borrowed to defray subdivisional costs was claimed as a business expense; • there is a level of development of the land beyond that necessary to secure council approval for the subdivision; and • buildings have been erected on the land. Paragraph 266 of MT 2006/1 further explains that where activities relating to isolated transactions are an enterprise or are the mere realisation of a capital asset are determined by weighing up these factors and other relevant factors. No single factor is determinative rather it will be a combination of factors that will lead to a conclusion as to the character of the activities. Paragraph 237 of MT 2006/1 provides that the term 'profit making undertaking or scheme' like the term 'an adventure in the nature of trade' concerns transaction of commercial nature which are entered into for profit-making, but are not part of the activities of an on-going business. Additionally, paragraph 270 of MT 2006/1 considers the meaning of carrying on an enterprise in the context of land purchased with the intention of resale and states: Land bought with the intention of resale 270. In isolated transactions, where land is sold that was purchased with the intention of resale at a profit (which would be ordinary income) the Commissioner considers these activities to be an enterprise. This would be so whether the land was sold as it was when it was purchased or whether it was subdivided before sale. An enterprise would be carried on in this situation because the activities are business activities or activities in the conduct of a profit making undertaking or scheme and therefore an adventure or concern in the nature of trade. Based on the facts, we do not consider that the Trust is undertaking any activity in the form of an adventure or concern in the nature of trade under paragraph 9-20(1)(b) of the GST Act. Further as section 9-5(c) to (h) of the GST Act does not apply, we consider the activities of the Trust do not amount to the carrying on of an enterprise under section 9-20 of the GST Act. As paragraph 9-5(b) of the GST Act has not been satisfied we do not need to consider whether paragraph 9-5(d) of the GST Act applies. Conclusion The sale of the Property does not constitute 'carrying on an enterprise' under section 9-20 of the GST Act. Consequently, the Trust is not making a taxable supply when the Property is sold as the requirements of section 9-5 of the GST Act have not been met.