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This edited version has been archived due to the length of time since original publication.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: 1012617715863

Ruling

Subject: GST registration and the subdivision of a rural/residential property.

Question 1

Will the supply of the subdivided lots at the property be made in the course or furtherance of an enterprise that you carry on?

Answer

No.

Question 2

Are you required to be registered for Goods and Services Tax?

Answer

No.

This ruling applies for the following periods:

On or after 1 February 2013.

Relevant facts and circumstances

    • You purchased the property.

    • The property was purchased with the intention of building a house in which to reside. You and members of your family moved into the house.

    • Consent was obtained for a small subdivision.

    • In recent years construction on the subdivision commenced and is completed.

    • The only work undertaken was the minimum required to comply with the development consent.

    • You will not be constructing anything on the property or subdivided lots.

    • The lots do not have access to electricity, telephone, sewerage or town water.

    • You will retain one lot as your home and sell the other lots.

    • You are not currently registered for GST.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-20 and

A New Tax System (Goods and Services Tax) Act 1999 Section 23-5.

Reasons for decision

All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise stated.

Question 1

The sale of the subdivided lots by you will not amount to an enterprise as it does not fulfil the requirements set out in section 9-20.

Subsection 9-20(1) that an enterprise as an activity, or series of activities, done:

    • in the form of a business; or

    • in the form of an adventure or concern in the nature of trade.

Goods and Services Tax Determination GSTD 2006/6 and Miscellaneous Tax Ruling MT 2006/1 provides guidance on the meaning entity and enterprise for the purposes of the GST Act. MT 2006/1 outlines factors which provide an indication that a 'one-off' or isolated property transaction is an adventure or concern in the nature of trade. These include:

    • there is a change of purpose for which the land is held;

    • there is a level of development of the land beyond that necessary to secure council approval for the subdivision; and

    • buildings have been erected on the land.

None of the factors stated apply to your present situation. Therefore in respect of the subdivision and subsequent sale of the Property, you are not carrying on an enterprise.

Question 2

You are not required to be registered for GST as you do not meet the requirements set out in section 23-5.

Section 23-5 states that you are required to be registered for GST if:

    • you are carrying on an enterprise

    • your GST turnover meets the registration turnover threshold

We have concluded that in subdividing the land you are not carrying on an enterprise. Therefore, you do not satisfy the first essential condition of being required to be registered for GST in relation to your activities in connection with the land.


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