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Edited version of private advice
Authorisation Number: 1051868947023
Date of advice: 31 August 2022
Ruling
Subject: GST - sale of subdivided land
Question1
Will the sale by any or all of the co-owners of the property described in the facts be a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and if so who will be making that supply?
Answer
Yes. Based on the specific facts the co-owners of the property, will make taxable supplies of real property as a tax law partnership for GST purposes. Those supplies will be for consideration, connected with the indirect tax zone (Australia), made in the course of their identified enterprise of property development as an adventure in the nature of trade or as a profit-making undertaking or scheme. The tax law partnership (TLP) will be required to be registered for GST as it will exceed the projected turnover threshold.
Question 2
Will the supply of the property described in the facts be a sale subject to the GST and settlement provisions?
Answer
Yes.
This ruling applies for the following periods:
From 1 September 20XX until 30 September 20XX
The scheme commences on or about:
20XX
Relevant facts and circumstances
The parties entered into an agreement to do all things necessary to effect the sale of the property in the form of vacant land. Pursuant to their agreement, the participants acted together to bring about the subdivision and sale. Amongst other things, this included the appointment of a surveyor, and an architect to draw up plans for housing, appointing agents and taking all steps necessary to bring about sales of the subdivided property. Expenses and income are to be made via a joint bank account established for their purpose.
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.
A New Tax System (Goods and Services Tax) Act 1999, section 23-15.
A New Tax System (Goods and Services Tax) Act 1999, section 184-1.
A New Tax System (Goods and Services Tax) Act 1999, section 188-10.
A New Tax System (Goods and Services Tax) Act 1999, section 195-1.
Income Tax Assessment Act 1997, section 995-1
The Taxation Administration Act 1953, Schedule 1, section 14-250.
Reasons for decision
The parties under the specific facts are acting together in a relationship best described as a tax law partnership as they are co-owners who will be in receipt of income on the sale of the subdivided lots whilst engaged in an adventure in the nature of trade.
As the supplies of the property are taxable supplies of vacant land, those supplies are of potential residential land, the GST at settlement provisions set out in the Taxation Administration Act 1953, schedule 1 apply.
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