Private ruling: GST - property development
Date of advice: 19 May 2026
Published: 3 August 2026
Ruling period: DD MM 20YY to DD MM 20YY | The scheme commence d on: | DD MM 202YY
Date scheme commenced: DD MM 202YY

Ruling: Q1: Will Person A & Person B (the Taxpayers) be undertaking an 'enterprise' within the meaning of the definition under section 9-20 of the A New Tax System (Goods and Services Tax Act) 1999 (GST Act)? | A1: Yes. | Q2: If the Taxpayers are undertaking an 'enterprise' within the meaning of section 9-20 of the GST Act, at what point or stage are they required to be registered by under section 23-5 of the GST Act? | A2: The Taxpayers are required to register for GST at the point they become aware that their current or projected GST turnover will exceed the $X registration threshold for the relevant tax period, as provided for in section 188-10 of the GST Act. This may occur, for example, when the proceeds received under the Development Agreement exceed, or will exceed over the next X months, $X. They may voluntarily backdate their GST registration to an earlier tax period in which the property development enterprise was under serious contemplation or had commenced. | Q3: Is the disposal of the land by the Taxpayers included in the turnover threshold calculations under sections 188-15 and 188-20 of the GST Act? | A3: Yes.

Relevant facts and circumstances: In 19XX, the Taxpayers bought vacant land mainly to support adjacent commercial properties and for long-term land banking. The land remained unused (except boundary adjustments) and later became suitable for residential development. In 20XX, they entered a development agreement (DA) where a related developer will build and sell X dwellings using funds loaned by the Taxpayers on a non-arm's length basis. The Taxpayers take a passive role under the DA and will only receive a fixed (capped) amount of return ($X) which represents the agreed unimproved land value and also the repayment of the non-arm's length interest free loan, with the Taxpayer receiving no share in development profits. Historical activities of the Taxpayers relevant to the ruling include: 1. The acquisition of a commercial property (X Street) to hold as a capital asset for the purpose of deriving rental income - through X Trust; and 2. The acquisition and development of a commercial property (Y Street) for the purpose of building and selling commercial lots - through the Partnership. It is noted that the Partnership retained ownership of X lots (out of X lots), from which the Partnership has derived rental income. 3. The Land was acquired to facilitate boundary alignments with respect to X Street and Y Street.

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 | A New Tax System (Goods and Services Tax) Act 1999 section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 Division 38 | A New Tax System (Goods and Services Tax) Act 1999 section 40-65 | A New Tax System (Goods and Services Tax) Act 1999 section 40-75 | A New Tax System (Goods and Services Tax) Act 1999 section 188-10 | A New Tax System (Goods and Services Tax) Act 1999 section 188-15 | A New Tax System (Goods and Services Tax) Act 1999 section 188-20 | A New Tax System (Goods and Services Tax) Act 1999 section 188-25

Reasons for decision: Summary: Yes. The Taxpayers are conducting an enterprise in the form an adventure or concern in the nature of trade. | Detailed Reasoning - Detailed reasoning: Section 9-20 relevantly defines 'enterprise' to include an activity, or series of activities done: (1) An enterprise is an activity, or series of activities, done: (a) in the 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 [...] The meaning of 'enterprise' is considered in 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 ) and in 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) which provides that the discussion on 'enterprise' in MT 2006/1 applies to the GST Act. In MT 2006/1, the Commissioner, at paragraph 234 distinguishes between activities done in the form of a 'business' and those done in the form of 'an adventure or concern in the nature of trade': 234. Ordinarily, the term 'business' would encompass trade engaged in, on a regular or continuous basis. However, an adventure or concern in the nature of trade may be an isolated or one-off transaction that does not amount to a business, but which has the characteristics of a business deal. The commercial nature of a transaction or scheme is significant in determining whether the activities are done in the form of an adventure or concern in the nature of trade. This is further explained in MT 2006/1 at paragraph 237: 237. The term 'profit-making undertaking or scheme' like the term 'an adventure or concern in the nature of trade' concerns transactions of a commercial nature which are entered into for profit-making but are not part of the activities of an on-going business. Both terms require the features of a business deal, see McClelland v. Federal Commissioner of Taxation , in which Lord Donovan, delivering the opinion of the majority said: It seems to their Lordships that an 'undertaking or scheme' to produce this result must - at any rate where the transaction is one of acquisition and resale - exhibit features which give it the character of a business deal. It is true that the word 'business' does not appear in the section but given the premise that the profit produced has to be income in its character their Lordships think the notion of business is implicit in the words 'undertaking or scheme'. Paragraph 244 of MT 2006/1 further explains that an adventure or concern in the nature of trade including a commercial activity that does not amount to business, but which has the characteristics of a business deal are of a revenue nature. In paragraphs 262 to 270 of MT 2006/1, the Commissioner considers whether isolated property transactions, including those involving the subdivision and sale of land, are considered to be a profit making undertaking or scheme, as opposed to the mere realisation of a capital asset. Paragraphs 264 to 265 of MT 2006/1 state: 264. The cases of Statham & Anor v. Federal Commissioner of Taxation (Statham) and Casimaty v. FC of T (Casimaty) provide some guidance on when activities to subdivide land amount to a business or a profit-making undertaking or scheme. In these cases, farm land was subdivided and sold. Minimal development work was undertaken to meet council requirements and to improve the presentation of certain allotments. On the particular facts of these cases the courts held that the sales were a mere realisation of a capital asset. 265. From the Statham and Casimaty cases a list of factors can be ascertained that provide assistance in determining whether activities are a business or an adventure or concern in the nature of trade (a profit-making undertaking or scheme being the Australian equivalent, see paragraphs 233 to 242 of this Ruling). If several of these factors are present it may be an indication that a business or an adventure or concern in the nature of trade is being carried on. These factors are as follows: • 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 the 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. In Commissioner of Taxation v Morton [2026] FCAFC 31 ( Morton ), the Full Federal Court affirmed the finding in Morton v FC of T [2025] FCA 336, that the taxpayer, who had entered into development agreements with a third-party developer for his farmland to be subdivided and sold as individual allotments in a housing estate, at no stage embarked on a business of developing land, nor had he ventured the relevant land into a profit-making scheme. Consequently, the proceeds from the sale of lots were not assessable as income from business or profit-making activity in the taxpayer's hands. The Court observed the development agreement did not create the type of agency that supported the conclusion the developer's business was the taxpayer's business. The taxpayer played little active role in the development of the land - he did not oversee the project, contribute in substance to planning applications, organise project finance, or manage the works involved. Whilst the taxpayer may have received monthly reports pursuant to the development agreement, he took little active interest in the conduct of the development. The Court found that the scale of the development was a factor that was not informative in the particular circumstances of the case and did not weigh in the balance, one way or another. In Morton, reaching its conclusion that at no stage had the taxpayer embarked on a business of developing land, nor had he ventured the relevant into a profit-making scheme, the Court placed weight on the following matters: • The taxpayer acquired the land for farming, not resale at a profit. • The profitability and viability of the farmland was affected by rezoning, increased rates and land tax. • The taxpayer was unwilling to make any part of the land available to any developer to use as security for the developer's financing. • The taxpayer did not borrow to fund the development. • The taxpayer was unwilling to be actively involved in the project. In Re FLZY and Federal Commissioner of Taxation [2016] AATA 348 ( Domazet ), the Tribunal dealt with the disposal of property by a taxpayer whose business encompassed the acquisition, development and disposal of properties as well as the acquisition and/or development of properties for the purpose of the derivation of rental income. The taxpayer had acquired the property in question, an office building and a carpark, with an intention that both would be retained as commercial property investments for the purpose of producing rental and other income. The carpark was demolished to allow for construction of a building. Construction was substantially completed and tenants had been secured for the whole of the building. The taxpayer had received offers to purchase the car park from time to time after its acquisition, and a short time after securing the tenants the taxpayer received an offer for the car park which it chose to accept. The taxpayer formed the view that the property market was overheated. In rejecting the Commissioner's position that the sale of the property was on revenue account, the Tribunal made the following observations: 52. A wide survey and an exact scrutiny of the activities of the Doma Group shows that the relevant, but quite discrete, activities carried on by the Group have been: (a) the acquisition, development and sale of residential properties; (b) the acquisition and development of residential properties to hold as capital assets for the purpose of the derivation of rental income; (c) the acquisition, development and sale of commercial properties; (d) the acquisition of commercial properties to hold as capital assets for the purpose of the derivation of rental income; and (e) the acquisition and development of commercial properties to hold as capital assets for the purpose of the derivation of rental income. 54. [...] The site of the Woden carpark (which later became the Glasshouse) was, at the time of acquisition, earmarked for activity (d). [...] 55. My view of the proper characterisation of the Doma Group's business activities means that I must reject the Commissioner's submissions that the Group was carrying on 'a business of the acquisition, development and disposal of properties or, alternatively, a business which included investing in property assets' 56. Neither of those characterisations, in my view, can be sustained on a proper wide survey and exact scrutiny of the Group's activities, because they fail to acknowledge the discrete nature of the different activities that the Group was undertaking. 57. The first of those characterisations could hardly be less exact. It is so generalised as to be quite misleading. Admittedly, the Doma Group did all of those things - acquisition, development and disposal - but it did not do all of them with respect to all of its properties. To say that that was its business is to avoid the very careful examination of its activities that was mandated by the High Court in Western Gold Mines [...] 58. The second characterisation - that the Group was carrying on a business which included investing in property assets - is unhelpful. Like the first characterisation, it ignores the discrete nature of the Group's different activities and the specific allocation of a given property to an identified activity [...] 59. As a further alternative, the Commissioner submits [E]ven if the Domazet Family Trust was not carrying on either of the businesses identified above, the Woden Car Park was part of a profit-making scheme; namely, it was a commercial acquisition and the trustee of the Domazet Family Trust acquired it with a profit-making intention which included not only the receipt of lease income, but other possibilities, including development and sale, as occurred: the Glasshouse was constructed and ultimately sold. 60. The 'possibilities' to which the Commissioner refers are remote, and not at all contemplated. It is, of course, always possible that the owner of an asset will sell it, but to elevate that possibility here into an intention to make a profit by selling the property is to draw a long bow indeed. The Commissioner ran a similar argument in Westfield , and it was rejected by the Full Court: (1991) 28 FCR 333 at 338-341 66. The transaction by which the Glasshouse was disposed of was not a transaction undertaken in the ordinary course of the Doma Group's business activities...Nor was the property acquired for the purpose of profit-making by sale: see Myer, 163 CLR 199 at 209. 67. It follows that the profit from the sale of the Glasshouse was a capital gain. The relevant intention or purpose of the taxpayer (of making a profit or gain) is the taxpayer's intention or purpose discerned from an objective consideration of the facts and circumstances of the case. Generally, in cases where a person's subjective purpose or intention is a relevant issue, the person's evidence as to their subjective purpose or intention can be considered but it must be tested closely, and received with the greatest caution. | Detailed Reasoning - Application in these circumstances: Having regard to the commercial context in which the Land was acquired and subsequently dealt with, the Commissioner considers that, on balance, the arrangement reflects more than the mere realisation of a capital asset. While the Taxpayers were not carrying on a business of property development, the manner in which the Land was ultimately exploited constitutes an enterprise for the purposes of section 9-20 of the GST Act, in the form of an adventure or concern in the nature of trade. The activities of the Taxpayers include: • The Land was acquired to facilitate boundary alignments with respect to X Street and Y Street. The Taxpayers had no specific or clearly articulated intention at the time of acquisition regarding the balance of the Land. A critical factor in Domazet was that, at the time of acquisition, the property was identified and earmarked for long-term holding as a capital asset for the purpose of deriving rental income. In contrast, in the present case there is no contemporaneous evidence that the balance of the Land was positively committed to such an investment purpose. However, the absence of a specific subjective intention at the time of acquisition does not of itself lead to the conclusion that the Land was not held or later applied for a profit-making purpose. The character of the activity must instead be determined by reference to the objective facts and circumstances, including the manner in which the Land was subsequently dealt with in a commercial context. In this regard, a relevant consideration is that Y Street was acquired for the purpose of developing commercial lots for sale. The retention of 3 lots by the Partnership appears incidental, rather than indicative of a deliberate intention to acquire and develop Y Street for the purpose of deriving rental income to any notable degree. In considering that commercial context referred to in the paragraph immediately above, the Taxpayers' broader property activities, including the acquisition and development of Y Street for the purpose of constructing and selling commercial lots, do not determine the character of the Land, but they do provide relevant background against which the Taxpayers' approach to the use and disposition of the Land may be assessed. That background informs the evaluation of whether, beyond the initial boundary alignment purpose, the Land was later applied in a manner consistent with a contemplated commercial disposal for profit, as opposed to being, for example, positively committed to long-term holding for income production. Notwithstanding that the Land was held for a lengthy period, which is a factor commonly associated with capital assets, that factor is not determinative. In the present circumstances, the absence of a clearly defined investment purpose at acquisition, when viewed together with the Taxpayers' commercial property activities and subsequent conduct, supports the conclusion that disposal of the Land at a profit was within the range of contemplated outcomes. When the Land was ultimately committed to the DA and dealt with through a structured process directed toward its development and sale, it ceased to be held passively and was instead applied to a commercially directed profit-making undertaking. The activity went beyond a simple realisation of an asset and involved the organised exploitation of the Land in a manner characteristic of trade. This transition from passive to active activity is explained in the matter of Ian Mark Collins & Mieneke Mianno Collins ATF, The Collins Retirement Fund and Commissioner of Taxation [2022] AATA 628 ( Collins ) : The Tribunal held at [26] that, for the purpose of paragraph 188-25(a), the character of an asset must be determined at the time the supply is made or is likely to be made. Section 188-25 only arises for consideration where the supply is or would be made in the course of an enterprise the taxpayer carries on. The Tribunal accepted at [24] and [53] that the applicant's intention or object at the time the asset is acquired is not determinative and is of less significance than it is for the purposes of the capital versus revenue dichotomy in the income tax context. It is noted that under the DA, the Taxpayers' return is capped at the agreed undeveloped value of the Land together with repayment of their financial contribution, and that they do not share in any development profits or uplift. However, it is noted that the Taxpayers are at commercial risk of their contribution amount, even though the Developer is solely entitled to any upside. While this fixed return may bring into question the revenue characterisation, it is not determinative. The absence of profit participation does not, of itself, preclude the conclusion that the Land was applied to a structured, commercially directed development and sale process. The character of the proceeds must be assessed having regard to the arrangement as a whole and the manner in which the Land was ultimately exploited, rather than solely by reference to the Taxpayers' lack of participation in development profits. Collins illustrates this conclusion: 64. Likewise, that the applicant chose to sell vacant land and, as the applicant expressed it, left further profits on the table by not constructing and selling houses on the lots for further profit, in my view provides little assistance to the applicant. Every operator of a land development business that chooses to sell allotments rather than house and land packages has made such a choice. The Commissioner accepts that the Taxpayers are not carrying on (and had no intention of carrying on) a business with respect to the development of the Land - the DA does not create the type of agency to conclude that the Developer's business is the Taxpayers' business: • The DA expressly provides that it does not establish a partnership and does not authorise the Developer to act as the Taxpayers' agent except in accordance with terms of DA - whilst those permissible acts may operate to create some agency, under the DA the Developer acts as an independent party, assumes risks, and conducts the development in its own right. • The Taxpayers play little active role in the development of the Land - they do not oversee the project, contribute in substance to planning applications, or manage the works involved. They take little active interest in the conduct of the development of the Land. The nature of the Taxpayers' funding of the development can be distinguished from the type of risk set out in Morton to conclude that the Taxpayer is carrying on an enterprise of an adventure or concern in the nature of trade. Unlike Morton , the Taxpayers' exposure is considerable and arises in the context of funding a related Developer on non-arm's length terms. Accordingly, while the Taxpayers were not carrying on a business for the purposes of paragraph 9-20(1)(a), the activities undertaken in relation to the Land constitute an adventure or concern in the nature of trade under paragraph 9-20(1)(b), and therefore an enterprise for GST purposes. | Detailed Reasoning - Question 2: If the Taxpayers are undertaking an 'enterprise' within the meaning of section 9-20 of the GST Act, at what point or stage are they required to be registered by under section 23-5 of the GST Act? | Summary: The Taxpayers are required to register for GST at the point they become aware that their current or projected GST turnover will exceed the $75,000 registration threshold for the relevant tax period, as provided for in section 188-10 of the GST Act. This may occur, for example, when the proceeds received under the Development Agreement exceed, or will exceed over the next 12 months, $75,000. They may voluntarily backdate their GST registration to an earlier tax period in which the property development enterprise was under serious contemplation or had commenced. | Detailed Reasoning - Detailed reasoning: Registration under section 23-5 provides that the Taxpayer is required to be registered for GST if: • you are carrying on an enterprise, and • your GST turnover meets the GST registration turnover threshold, which is currently $75,000 for entities other than non-profit entities. Subsection 188-10(1) provides that you have a GST turnover that meets the registration turnover threshold if: • your current GST turnover is at or above the registration turnover threshold, and the Commissioner is not satisfied that your projected GST turnover is below the registration turnover threshold, or • your projected GST turnover is at or above the registration turnover threshold. Section 40-65 provides that new residential premises are not input taxed supplies of residential premises: | Detailed Reasoning - Sales of residential premises: (1) A sale of * real property is input taxed , but only to the extent that the property is • residential premises to be used predominantly for residential accommodation (regardless of the term of occupation). (2) However, the sale is not input taxed to the extent that the • residential premises are: (a) * commercial residential premises ; or (b) * new residential premisesother than those used for residential accommodation (regardless of the term of occupation) before 2 December 1998. [...] Section 40-75 defines new residential premises as: Meaning of new residential premises When premises are new residential premises (1) * Residential premises are new residential premises if they: (a) have not previously been sold as residential premises (other than * commercial residential premises) and have not previously been the subject of a * long - term lease; or (b) have been created through * substantial renovations of a building; or (c) have been built, or contain a building that has been built, to replace demolished premises on the same land. [...] The supply of new residential premises, not being input taxed and not listed within Division 38 as a GST-free supply, are a taxable supply under section 9-5. Section 9-5 provides that a supply is taxable if: | Detailed Reasoning - Taxable supplies: 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. As the sale of residential premises will be for consideration, supplied through your enterprise, supplied in Australia (indirect tax zone), and requiring the Taxpayer to be registered for GST (explained below), the supply will be taxable under section 9-5. The sale of the residential dwellings should be included in the turnover figures by the Taxpayers. At the point the Taxpayer is entitled to receive proceeds through the operation of clause X of the DA, it should be included in the Taxpayers projected turnover calculations. At that stage, registration is required where the proceeds will exceed the turnover threshold and the Taxpayer should register prior to the expected sales because the projected GST turnover would have been in operation per section 188-20 which states: (1) Your projected GST turnover at a time during a particular month is the sum of the *values of all the supplies that you have made, or are likely to make, during that month and the next 11 months, other than: (a) supplies that are *input taxed; or (b) supplies that are not for *consideration (and are not *taxable supplies under section 72-5); or (c) supplies that are not made in connection with an *enterprise that you *carry on. [...] As the Taxpayer did not make an input taxed supply of residential premises, the prospective supplies of residential dwellings are for consideration, and as established above, the supply will be in the course of the Taxpayer's enterprise, the sale is included in the Taxpayer's turnover calculation. In consideration of whether the sale of the land and residential premises are a consequence of ceasing to hold the land as a capital asset, section 188-25 sets out that supplies made of capital assets or supplies made as a consequence of ceasing to carry on an enterprise or substantially and permanently reducing the size or scale of the enterprise are to be disregarded. This requires further consideration in relation to the Taxpayers arrangements. The taxpayer in Collins raised the question whether section 188-25 applies where a property developer sells property as trading stock and thereby substantially reduces the size and scale of their enterprise. The Administrative Appeals Tribunal as it then was, stated that the purpose of paragraph 188-25(b) is to exclude from calculation the value of projected supplies that are outside the usual run of transactions which, if included, would distort an assessment of the scale of an entity's enterprise. The Tribunal found at [73] and [77] that the sale of land is the central objective of a land development enterprise and the sales were made in the course of and as a consequence of the applicant carrying on the enterprise, not as a consequence of ceasing, or a reduction in the size or scale of, that enterprise. The Tribunal considered at [78] that the applicant's approach under either limb of paragraph 188-25(b) would mean that land developers could escape GST on land sales transacted in the ordinary course of their business as being made solely as a consequence of ceasing or substantially and permanently reducing the size or scale of their enterprise. We consider the findings in Collins applicable to the Taxpayers affairs, that by realising the capital asset through an enterprise is not the cessation of an existing enterprise, rather a new and separate enterprise that results in the supply of new residential premises by the Taxpayer as the principle activity. As a result, the Taxpayer is required to be registered at the time when the proceeds received by the Taxpayer under the DA exceed the current or projected GST turnover threshold. However, the Taxpayer can voluntarily backdate the registration to a tax period where the project enterprise was in serious contemplation. | Summary: The Taxpayer is making supplies of new residential premises, those supplies are not input taxed, are made for consideration, and are made in connection with an enterprise, those supplies are required to be included under section 188-15 in the current GST turnover threshold calculations. | Detailed Reasoning - Detailed reasoning: Current GST turnover threshold under section 188-15 provides: | Detailed Reasoning - Current GST turnover: General (1) Your current GST turnover at a time during a particular month is the sum of the * values of all the supplies that you have made, or are likely to make, during the 12 months ending at the end of that month, other than: (a) supplies that are * input taxed; or (b) supplies that are not for * consideration (and are not * taxable supplies under section 72 - 5); or (c) supplies that are not made in connection with an * enterprise that you * carry on. As the Taxpayer is making supplies of new residential premises, those supplies are not input taxed, are made for consideration, and are made in connection with an enterprise, those supplies are required to be included under section 188-15 in the current GST turnover threshold calculations.

This ruling applies for the following period: