| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051846002983
Date of advice: 1 June 2021
Ruling
Subject: GST and sale of vacant land
Question
Is GST payable on your sale of the vacant land?
Answer
No. GST is not payable on your sale of the land because the sale will not be a taxable supply under section 9-5 of the A New Tax System (Good and Services Tax) Act 1999. The sale will not be made in the course or furtherance of an enterprise that you carry on as it will be the mere realisation of a capital asset.
You may need to notify the purchaser in writing that they do not have a GST withholding obligation and do not need to pay a GST withholding amount from the contract price of the land to the Australian Taxation Office (ATO) when purchasing the land. This can be included in the sale contract or in a separate document prior to settlement.
Relevant facts and circumstances
You are registered for GST.
You carry on a retailing business.
You registered for GST with effect from (date) as the sales turnover of your retailing business exceeded $75,000 for the first time.
You inherited vacant land at (address) on (date) from your parent, (X) who died on (date). The land covers an area of (Y) hectares and has no existing structures. Zoning is currently medium density residential zone.
X had previously sought and received approval from the local council to subdivide two smaller blocks off the land parcel. A negotiated decision notice was issued on (date).
You are seeking to sell the entire parcel of land, as an offer has been received from an interested party. Your intention is to realise the value of the land to establish a home of your own and take your retailing business to the next level.
The land is not used in your retailing business and does not form part of any business. You have not derived any income from the land during your period of ownership.
You have not utilised the land for personal enjoyment in any way.
Your earnings are quite limited. Holding the land costs about (amount) a year in council rates, insurance, water and maintenance charges. This cost is onerous on your present level of income.
You do not have the financial resources to develop the land into the medium density residential dwellings indicated by the zoning. You also do not have the experience in property development, or the desire to commence a project of this kind.
You have merely retained the approval for subdivision to retain the features of the land that would help realise its potential. You have not performed any subdivision activity in relation to the land. You have done minimal activity in the nature of maintaining the land during your period of ownership.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 section 9-20
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
