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ATO Interpretative Decision

ATO ID 2001/277 (Withdrawn)

Goods and Services Tax

GST and Sale of Vacant Residential Land
FOI status: may be released
  • This ATO ID is a straight application of the law and does not contain an interpretative decision.
    This document has changed over time. View its history.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the entity, a property developer, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells vacant residential land?

Decision

Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it sells vacant residential land.

Facts

The entity is the seller of vacant residential land. The entity is registered for goods and services tax (GST) and is selling the vacant residential land in the course or furtherance of its enterprise. The supply is made for consideration and is connected with Australia.

Reasons for Decision

GST is payable on taxable supplies. Under section 9-5 of the GST Act, an entity makes a taxable supply if:

•
it makes a supply for consideration;
•
it makes the supply in the course or furtherance of an enterprise that the entity is carrying on;
•
the supply is connected with Australia; and
•
the entity is registered or required to be registered.

However, the supply is not a taxable supply to the extent that the supply is GST-free or input taxed.

In this case, the supply satisfies all of the positive elements of section 9-5 of the GST Act and is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it sells the vacant residential land.

[NOTE: As the entity is making a taxable supply when it sells the vacant residential land it will be liable for one-eleventh of the GST-inclusive sales price. However, the entity may choose to apply the margin scheme under Division 75 of the GST Act, in which case it will only be liable for one-eleventh of the margin.

It is irrelevant whether the property vendor sells the vacant residential land to a private purchaser or to an investor].

Date of decision:  5 April 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   Division 40
   Division 75

Keywords
Goods & services tax
GST supplies & acquisitions
Connected with Australia
GST consideration
GST enterprise
GST supply
Taxable supply

Business Line:  GST

Date of publication:  8 September 2001

ISSN: 1445-2782

history
  Date: Version:
  5 April 2001 Original statement
You are here 9 December 2005 Archived

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