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  • Determine if you are running an enterprise

    A supply of new residential premises or potential residential land in Australia will be a taxable supply if you're registered or required to be registered for GST and the supply is:

    • made for consideration
    • made in the course or furtherance of an enterprise you carry on
    • not a GST-free or input taxed supply – for example, a supply made as part of a GST-free supply of a going concern or a supply of GST-free farmland.

    If you are registered or required to be registered for GST and the supply is part of your business, GST at settlement may apply.

    Generally, you aren't carrying on an enterprise if your property transactions are for private purposes, such as constructing or selling your family home.

    Examples of an enterprise

    Examples of when your activities may be regarded as an enterprise:

    • you buy property with the intention of immediate resale at a profit
    • develop property to sell.

    Even a one-off property transaction may be an enterprise.

    You must register for GST:

    • when your business or enterprise has a GST turnover (gross income minus GST) of $75,000 or more (or $150,000 for non-profit organisations)
    • when you start a new business and expect your turnover to reach the GST threshold (or more) in the first year of operation
    • if you're already in business and have reached the GST threshold.

    Example 1: What is an enterprise?

    Steve and Kate learn that the local council recently changed its by-laws to allow for smaller lots in the area.

    They decide to take advantage of this and purchase a block of land with the intention to subdivide it into two and to sell them at a profit. They carry out their plan and sell both lots of land at a profit.

    This is an enterprise.

    End of example

     

    Example 2: What isn't an enterprise?

    Astrid and Bruno live on a large suburban block.

    The council has changed its by-laws to allow for smaller lots in their area. They decide to subdivide their land so their daughter Greta can build a house to live in.

    The council approves the subdivision and the title is transferred to Greta. She pays for all associated costs of the subdivision and her new house.

    This isn’t considered an enterprise and GST at settlement doesn’t apply.

    Generally, you’re not carrying on an enterprise if your property transactions are for private purposes, such as constructing or selling your family home.

    End of example

    Selling the family home

    If you aren't carrying on an enterprise and not registered for GST (or required to be registered), you won't be making a taxable supply when you sell your family home.

    See also:

      Last modified: 26 Mar 2020QC 56252