Private ruling: GST and sale of property
Date of advice: 16 December 2025
Published: 9 February 2026
Ruling period: dd/mm/yyyy to dd/mm/yyyy

Ruling: Q1: Is the sale of Lot 1 a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. Section 9-5 of the GST Act states that 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. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. The sale of Lot 1 meets the requirements in paragraph 9-5(a) to 9-5(d) of the GST Act. This is because the sale is for consideration, the sale in the course or furtherance of your enterprise as Lot 1 was an asset used in your leasing enterprise, is situated in Australia, and you are registered for GST. However, subsection 9-30(4) of the GST Act states: A supply is taken to be a supply that is *input taxed if it is a supply of anything (other than *new residential premises) that you have used solely in connection with your supplies that are input taxed but are not *financial supplies. Based on the information that you have provided, you used Lot 1 only in connection with your input taxed supplies of residential leasing. Since the residential leasing enterprise was terminated and the residential premises on Lot 1 were subsequently demolished, there is no indication that you have done anything to Lot 1 that would suggest that you commenced to hold it for a purpose not connected with your input taxed supplies of residential leasing. Therefore, the sale of Lot 1 satisfies the requirements of subsection 9-30(4) of the GST Act and is taken to be a supply that is input taxed.

Relevant facts and circumstances: You are registered for GST. You acquired a property under a contract entered in mm/yyyy and settled in mm/yyyy. At the time of acquisition, a residential dwelling existed on the property. Approximately 10 years after the purchase, you subdivided the property into two lots, Lot 1 (which contained the residential premises), and Lot 2 (which was vacant land). You transferred Lot 2 to your associates. Your associates built their principal place of residence on the site. Construction of the residence was completed in late yyyy. When the property was initially purchased, the intention was that the land would be used as the principal place of residence of your associates, and subsequently, town houses would be built for each of their children. This did not eventuate due to the ill health of one of the associates, in early yyyy. You leased out Lot 1 as residential premises until late yyyy. The residential premises on Lot 1 fell into disrepair. Due to squatters using the property, the local council requested demolition of the building. The residential premises were demolished in yyyy. Following the demolition of the residential premises, Lot 1 was held without leasing or plans for development and was not applied to another use following the cessation of leasing in yyyy. One of the associates passed away in mm/yyyy. Both properties were placed on the market due to the frail health of the other associate. In addition to the frail health of the associate, the holding costs associated with Lot 1 were significant. Moreover, effective from yyyy, the new Vacant Land Tax would further increase the cost. The timing of the sale was not motivated by profit. It was only decided to sell Lot 1 once the decision had been made to sell Lot 2. On dd/mm/yyyy, you entered into a contract for the sale of Lot 1 with a property developer. Settlement was completed on dd/mm/yyyy. No input tax credits have been claimed in relation to Lot 1 by you or any entity related to you, as the property was only ever used to make input taxed supplies. Further, no input tax credits were claimed in relation to the demolition of the dwelling nor for costs of holding the vacant land. Lot 2 was sold in yyyy to another buyer. You were, at all times, a passive investment vehicle established to provide retirement income for your associates. Outside the single subdivision, you have not undertaken any property development activities in relation to Lot 1, or other real estate assets held. You have not held any other vacant land. Your other real estate investments were made to yield rental income. You registered for GST with effect from 1 July 2000, due to commercial rents exceeding the GST registration turnover threshold. Your rental activities have substantially reduced since your GST registration, to a single rental property. As a result, your projected GST turnover is likely to fall below the GST turnover threshold.

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 9-30(4)