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Edited version of private advice
Authorisation Number: 1012657406510
Ruling
Subject: GST and the sale of property
Question:
Is the supply of the subdivided land by you subject to goods and services tax (GST)?
Answer:
No.
Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), 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.
Based on the information provided, your sale of the subdivided land does not satisfy all the requirements of a taxable supply under section 9-5 of the GST Act because:
(i) your activity of selling subdivided land does not constitute the carrying on an enterprise; and
(ii) you are neither registered nor required to be registered for GST.
Relevant facts and circumstances
You are not registered for GST.
You and your spouse purchased a property as vacant land in 19XX. No GST was included in the price of your purchase.
After purchasing the property, you and your spouse constructed a residential house on the property. A residential house was used as your family home since that time.
Your spouse subsequently passed away and the property was transferred to you.
You intend to subdivide the property into lots. The decision to subdivide the property and sell the property has arisen from the debt associated with the unforeseen circumstances relating to medical costs of your spouse.
Following the subdivision of the property, you intend to retain the portion of the property including the lot which contains your residence.
You have not previously been involved in the subdivision of land or the buying and selling of land for profit.
There have been no commercial activities carried on the property since your acquisition of the property.
You advise that you did not claim any GST on your acquisition of the property or for any expenses in relation to the property.
There is no business organisation associated with the subdivision of the land, and there is no manager employed or business premises used to conduct these activities.
You do not have a business plan for the subdivision. There is no organisation set-up for the subdivision and sales of the subdivided lots of land.
Works will only be carried out on the property to the necessary levels to achieve council approval for the subdivision.
You will use your personal funds and borrowings to fund the subdivision.