ATO Interpretative Decision

ATO ID 2001/144 (Withdrawn)

Goods and Services Tax

GST and sale of farmland with fruit trees
FOI status: may be released

The ATO view for this issue is covered in the Primary Production Industry Partnership Issue Register - Issue 6.2.17(a) - 'Do growing crops form part of the land in or on which they are growing?' and 6.2.17(b) - 'What are the GST implications when land on which there are growing crops is sold in circumstances which would satisfy the provisions of section 38-480 of the GST Act?'

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 fruit grower, making a single GST-free supply of farm land under section 38-480 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells its farm land together with the fruit trees planted on that farm land?

Decision

Yes, the entity is making a single GST-free supply of farm land under section 38-480 of the GST Act, when it sells its farm land together with the fruit trees planted on that farm land.

Facts

The entity is a fruit grower. The entity holds a freehold interest in farm land upon which it grows fruit trees. The entity is selling its freehold interest in the farm land together with the existing fruit trees. The entity is not including any farming equipment in the sale.

The purchaser intends that a farming business be carried out on the land. The entity has operated a farming business on its farmland for the period of five years immediately preceding the supply.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Subdivision 38-O of the GST Act allows the supply of farm land to be GST-free in certain circumstances. Section 38-480 of the GST Act provides that the supply of a freehold interest in land is GST-free if:

•: the land is land on which a farming business has been carried on for at least the period of 5 years preceding the supply; and
•: the recipient of the supply intends that a farming business be carried on, on the land.

In this case, as the supply of the farm land meets all of the requirements in section 38-480 of the GST Act, it is GST-free. However, the issue at hand is whether the fruit trees are included in the GST-free supply of the farm land or whether they are supplied separately.

It is considered that fruit trees and vines that are planted for the purpose of harvesting, pass with the land when that land is sold. A supply of land planted with fruit trees amounts to a single supply.

In this case, as the entity is making a GST-free supply of farm land under section 38-480 of the GST Act, the supply of the fruit trees planted on that farm land is also be GST-free under section 38-480 of the GST Act.

Date of decision: 6 April 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
Subdivision 38-O
section 38-480

Keywords
Goods & services tax
GST free
GST farm land
Supply of land

Business Line: GST

Date of publication: 1 August 2001

ISSN: 1445-2782

history

	Date:	Version:
	6 April 2001	Original statement
You are here	18 November 2005	Archived

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