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  • Working farms

    Capital gains

    You're likely to make a capital gain or capital loss when you sell (or otherwise cease to own) a working farm. Capital gains are subject to capital gains tax, with a discount for individuals and trusts, and concessions for small businesses.

    If your home is part of the working farm, you may be eligible for a partial main residence exemption.

    See also:

    GST

    Farmland you sell (or supply by way of a long term lease) is GST-free if both of the following apply:

    • the land was used for a farming business for at least five years immediately before the sale
    • the buyer intends to use it for a farming business.

    Note: the supply will be GST-free when you meet the above conditions regardless of whether you are, or are not, registered for GST.

    A short term lease by an Australian government agency is also GST-free if both the above conditions are met.

    A long-term lease is a lease for 50 or more years or a lease that is likely to continue for at least 50 years because of renewals or extensions provided for in the lease. Where a non-government entity supplies a lease of 50 years or more, the lease will only be a long term lease if the terms of the lease are substantially the same as under which the supplier held the lease.

    The sale (or supply by way of a long term lease) of subdivided land used for farming business for at least five years is GST-free if both of the following apply:

    • it's permissible to use the land for residential purposes
    • the supply is made to an associate of the supplier – such as a relative or a closely connected company or trust – for less than market value.

    Similarly, a short term lease of the subdivided land by an Australian government agency is also GST-free if both the above conditions are met.

    See also:

    Last modified: 13 Feb 2020QC 23655