Private ruling: Goods and services tax and vacant land
Published: May 2015
Date scheme commenced: 2015

Ruling: Q1: Will your supply of the vacant land be a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. The supply is made for consideration and in the course or furtherance of an enterprise that you carry on. In addition, the property is connected to Australia and you are registered for goods and services tax.

Relevant facts and circumstances: You are a company and are registered for goods and services tax (GST). You carry on a variety of enterprises. You bought vacant land in a housing estate which you acquired with the intention of building a house to carry on a bed and breakfast enterprise. You claimed the full GST credit on the acquisition of the land. You initially intended to allow the directors to live in the house and manage the bed and breakfast business as caretakers. However you also considered the possibility of selling the land to the directors for them to build the house and live in it whilst managing the bed and breakfast enterprise. One of the directors was ill for a number of weeks before they were able to consider the Local Government rules and regulations regarding bed and breakfast premises. You also considered the tax and business implications of running such an enterprise. You decided not to proceed with the idea of a bed and breakfast venture as it appeared to be complex. You then entered into a verbal contract to sell the land. The purchaser is not associated with you.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5