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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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 your private ruling

Authorisation Number: 1012513836141

Ruling

Subject: GST and supply of reclaimed land

Question

Is Goods and Services Tax (GST) payable on your sales of reclaimed land?

Answer

Yes.

Relevant facts and circumstances

You are registered for GST.

You own real property which is reclaimed land.

There are no residential premises located on any of the blocks of reclaimed land.

However at times there may be a structure such as a shed or a swimming pool.

The reclaimed land is currently leased to the owners of the adjoining freehold land and GST is charged on this rental.

At times you sell this reclaimed land when the adjoining freeholder seeks to purchase it. The sale is to adjacent property owners who normally want to establish exclusive access to the waterfront and enhance the value of their own property.

The reclaimed land is then subdivided from the title for sale.

You receive payment for the sales of reclaimed land.

You stated that you will not be selling the land as:

    · a supply of a GST-free going concern as defined in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

    · nor will Subdivision 28-N of the GST Act apply to your circumstances.

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 40-65

A New Tax System (Goods and Services Tax) Act 1999 Subdivision 38-N

Reasons for decision

GST is payable on the sale of real property if you make a taxable supply. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:

    You make a taxable supply if:

      (a) you make the supply for *consideration, and

      (b) the supply is made in the course or furtherance of an *enterprise that*you carry on; and

      (c) the supply is *connected with Australia; and

      (d) you are *registered, or *required to be registered.

    However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

    (*denotes a defined term in the GST Act.)

In your case, you satisfy the conditions at paragraphs 9-5(a) to 9-5(d) of the GST Act. That is, you make the supply of the reclaimed land for consideration and in the course or furtherance of the enterprise that you carry on. Additionally, these sales are connected with Australia, and you are registered for GST.

Therefore your supply will be taxable where it is not input taxed or GST-free.

Your sale of the reclaimed land will not be input taxed under section 40-65 of the GST Act as the properties do not contain residential premises and will not be input taxed under any other section of the GST Act in your factual situation. Therefore, what remains to be determined is whether your sales of reclaimed land are GST-free supplies.

There are a number of instances where the GST Act may have provided for a supply of real property to be GST-free. For example, subdivision 28-N of the GST Act (Grants of land by governments) provides grants of freehold and similar interests by governments to be GST-free subject to several conditions.

In your case, you have stated that these subdivisions of the GST Act do not apply to your circumstances. Furthermore, there are no other provisions that would make provision for your supply of reclaimed land to be GST-free.

As all of the requirements of section 9-5 of the GST Act are satisfied, the sales of reclaimed land are taxable supplies. Therefore, GST is payable on these sales.


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