Private ruling: GST and subdivision of land
Published: December 2014

Ruling: Q1: Are you making taxable supplies when you sell vacant lots from the subdivision of your property? | A1: No. The requirements of making a taxable supply include that the supply is made in the course or furtherance of an enterprise that you carry on and that you are registered or required to be registered for GST. We consider that you are not carrying on an 'enterprise' as defined in section 9-20 of the GST Act and you are neither registered nor required to be registered for GST in regard to your activities relating to the sale of the property.

Relevant facts and circumstances: You are not registered for GST. You purchased the property more than 40 years ago. The property is X ha. You have resided on the property for over 40 years. You carried on a business on the property until 1999 which ceased prior to the introduction of the goods and services tax. You entered into retirement in 1999. Around two years ago you realised your savings for retirement would not be sufficient. Neighbours with similar size blocks of land were subdividing and selling some or all of their land. You did not have the skills or financial resources to develop and subdivide the land. You were approached by a developer with an offer to develop and subdivide the property. You will enter into a Management Agreement and a Sale of Land Agreement with the developer. There will be no development on the land other than the minimum requirements necessary to secure approval of the subdivision. You have not borrowed funds to finance the subdivision as the developer will incur the costs of the development under the pursuant to the Management Agreement. No changes to the zoning are required for the subdivision. You intend to retain and continue to live on the lot containing your current residence.

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, and | A New Tax System (Goods and Services Tax) Act 1999 Section 9-40.