Edited version of private advice

Authorisation Number: 1052376944155

Date of advice: 15 April 2025

Ruling

Subject: GST - sale of property

Question 1

Are you making a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you sell the Property?

Answer 1

No.

The sale of the Property will not be a taxable supply as it will be the transfer of ownership of a capital asset of yours. Therefore, GST will not be payable as it does not meet all the requirements of section 9-5.

Relevant facts and circumstances

Husband and Wife (jointly referred to as "You") acquired the Property as joint tenants in 1990.

The Property is zoned rural and the total land area is a few acres. The Property consists of land and a residential home. The residential home is not separated from the rest of the land.

You carried on a market gardening business as a partnership from 1990 until 19XX (hereafter referred as 2-person partnership). During this time, the Property was listed as an asset of the 2-person partnership and was also your principal place of residence.

The 2-person partnership ceased in 19XX.

Following the cessation of the 2-person partnership, the Property became an asset of the two individuals. When applying for this private ruling application, you advised that ATO systems had issues verifying the 2-person partnership TFN as it had not been active for over 20 years.

From 19XX to 20XX, you carried on a market gardening business in partnership with your child (hereafter referred to as 3-person partnership). The Property was used by the 3-person partnership for gardening vegetables and pre-packing vegetables for deliveries to the markets. From 20XX, the Property was no longer your principal place of residence. The 3-person partnership acquired other properties, which are not subject to this private ruling application, and used them for the market gardening business.

From 20XX to 20XX, you commenced a market gardening business in another partnership with your child and their spouse (hereafter referred to as 4-person partnership).

From 20XX to 20XX, the Property was leased to an unrelated third party for farming purposes.

From 20XX to 20XX, the Property was used by the 4-person partnership for market gardening purposes.

Upon your retirement in 20XX, your child and their spouse, formed a new partnership (hereafter referred to as the new partnership) carrying on a market gardening business using the Property and other properties.

The new partnership used the Property until mid-20XX for market gardening purposes, however, due to COVID which affected the gardening industry as a whole and the deterioration of the soil quality, the use of the Property was mostly limited to the shed. During this period, you also visited the Property to maintain and upkeep its surrounding areas.

From mid-20XX onwards, the Property has not been used for market gardening purposes due to the poor soil condition and the ground needing to be pressed and rested after continuous farming use for over 30 years.

The 3-person, 4-person and the new partnership did not account for the Property as a business asset.

There was no expectation of profit when the Property was leased to related entities, as there was no rent payments made by the 3-person, 4-person and new partnership for the use of the Property. There have been expense payments such as water rates expenses incurred for market gardening operating purposes paid by the 4-persons partnership at least.

In relation to the proposed sale of the Property:

•                No development or preparation work was done;

•                No advertising was done. You sought a verbal referral from a contact who liaised interested developers;

•                No agreements have been signed with a real estate agent, and

•                No agreements have been signed with a purchaser; however, a draft has been prepared by the solicitors, pending the result of this private ruling application.

You provided a street view picture of the Property.

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 23-5

A New Tax System (Goods and Services Tax) Act 1999 section 188-5

A New Tax System (Goods and Services Tax) Act 1999 section 188-10

A New Tax System (Goods and Services Tax) Act 1999 section 188-15

A New Tax System (Goods and Services Tax) Act 1999 section 188-20

A New Tax System (Goods and Services Tax) Act 1999 section 188-25

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

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