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Edited version of your written advice
Authorisation Number: 1012814640743
Ruling
Subject: GST and the supply of farmland
Question
Will the supply of the Land by Entity A to Entity B, be a GST-free supply pursuant to section 38-480 of the A New Tax System (Goods and Services Tax) Act 1999?
Answer
Yes
Relevant facts and circumstances
Entity A registered for GST. It has a freehold interest in land located in Australia, (the Land).
The Land forms part of a larger farming property. A cattle farming business has been carried out on the Land for at least 5 years.
Entity A entered into a contract to sell the freehold interest in the Land to Entity B. Entity B will allow the farming business to be carried on after settlement of the Contract under an informal arrangement.
There are no residential premises located on the land.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 38-475 and
A New Tax System (Goods and Services Tax) Act 1999 Section 38-480.
Reasons for decision
• all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
• all reference materials referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au
• all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act
Section 38-480 provides that:
The supply of a freehold interest in, or lease by an Australian government agency of or the long term lease of, land is GST-free if:
a. 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
b. The recipient of the supply intends that a farming business be carried on, on the land.
The term farming business is relevantly defined in sub-section 38-475(2) maintaining animals for the purpose of selling them or their bodily produce (including natural increase).
The Land will be sold freehold
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 will be carried on after settlement.
Therefore the supply of the Land by Entity A to Entity B will be GST-free pursuant to section 38-480.
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