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Edited version of your written advice
Authorisation Number: 1051306666938
Date of advice: 14 November 2017
Ruling
Subject: GST and sale of real property
Question 1
Will the supply of the land by the Relevant Minister administering the relevant Act, through the Department to Entity B, be GST-free under section 38-445 of the A New Tax System (Goods and Services Tax) Act 1999?
Answer
Yes
Relevant facts and circumstances
Land contract
The registered proprietor of the Land is The Relevant Minister Administering the relevant Act.
The Minister entered into a contract of sale with Entity B that was signed on ddmmyyyy (the Contract). Settlement is due to occur on ddmmyyyy (Settlement Date).
Where the ATO determines by way of private ruling that the supply of the Land qualifies as GST-free, the Parties have agreed to treat the supply of the Land as GST-free.
The Parties
The Department is a government entity. The Department is a wholly owned and controlled entity of the State of xxxx. The principal function of the Department is to assist the Minister in the administration of the Act.
Both the Department and Entity B are currently registered for GST.
The Land
The Land is located within the relevant local government authority.
Historically, the Land was likely used for agricultural purposes for a period of time, after which the Land appears to have been vacant land for several decades.
From yyyy to yyyy, the Land was used for a specified purpose. In yyyy, the structures on the Land were demolished. The Land is currently vacant and has been vacant since yyyy.
A number of potential human interventions have taken place on (or in the vicinity of) the Land, including:
● levelling
The Environmental Site Assessment indicates that the site is very flat, with no obvious signs of fill. This suggests that there no depressions or rocky knolls on the site – such that levelling was not required.
● clearing
The aerial photography shows that in yyyy the Land was sparsely vegetated. For a period of time, the Land was used for agricultural purposes, and around the time of the aerial photo had been vacant, fallow land
The relevant local authority Landscape Guidelines indicate that the landscape supported very few trees
The Environmental Site Assessment suggests that there were no depressions or rocky knolls on the site. This, in combination with the Landscape Guidelines, suggests that the primary vegetation was tussock grasses – such that clearing of trees was not required.
The aerial photographs show a substantial number of planted mature trees now growing on the Land.
● Fencing
The second Valuation Report indicates that there is cyclone mesh fencing surrounding the perimeter.
The fencing will be removed prior to settlement.
● soil stockpiling
The Environmental Site Assessment notes that there is a small stockpile of soil on the site.
The Stockpile will be removed prior to settlement.
● construction / installation of:
● buildings
The Environmental Site Assessment notes the existence of buildings.
These buildings will be removed prior to settlement.
● drainage pits
The drainage pits noted in the Environmental Site Assessment have been removed.
● underground storage tank pit
The underground storage tank pit noted in the Environmental Site Assessment has been removed.
● areas of hardstand
The areas of hardstand were previously used during the Land's former operation. Since the closure of the facility, the areas have not been maintained and are now in a derelict and dilapidated state, such that it would not be financially viable to repair the hardstand.
● a concrete slab on the street frontage crosses over from the street to inside the Land's boundary
It is unclear what the use of the concrete slab has been in the past.
It does not provide a means of access across the Land.
The area has not been maintained since the closure of the facility.
Similar to the areas of hardstand, it is in a state of disrepair such that it would not be financially viable to repair the slab.
● utilities infrastructure (eg gas, sewerage)
All existing utilities infrastructure that may be present under the land (historically used by the facility) are unusable and redundant and not able to be connected to any services.
Due to their current state, age and outdated specifications, all such infrastructure would not be fit for future use.
There will also be a cost associated with the removal of such infrastructure.
For any future use of the site, new utilities infrastructure will need to be developed and any existing infrastructure will not be used due to its dilapidated and irreparable state.
● an uncapped and rusted pipe which sits above the surface of the Land near the Land's boundary
It is unclear what the use of the pipe has been in the past – possibly for either gas or water or possibly the fire hydrant that was required for the facility.
Prior to lodgement of the ruling request, the pipe was investigated by X, who advised that the pipe is rusted, uncapped, and is not currently connected to any services. Due to its current state, the pipe will not be fit for future use as a services connection. They further indicated that, for any future use of the site, new utilities connections will need to be made directly to the utility source, and will not be made via the pipe due to its dilapidated and irreparable state.
Further, there are services connections (including water, electricity, telephone, gas and sewerage) which lie outside the Land's boundary.
You provided the following documents in support of your private ruling application:
● Environmental Site Assessment
● Current and historic aerial and ground level photography of the Land
● First Valuation Report
● Second Valuation Report
● Statement from X regarding an uncapped, rusted pipe which will exist on the boundary of the Land at the Settlement Date
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 38-445
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