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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1012695087095

Date of advice: 11 September 2014

Ruling

Subject: GST and the sale of vacant land

Question

Will your sale of the property be a taxable supply?

Answer

No

Relevant facts and circumstances

You acquired land in 1XXX. It is located in Australia and is vacant.

You are not registered for GST and contend that you are not carrying on an enterprise.

You have not previously conducted any land development or building activities and do not hold any land as trading stock.

You intend to sell the property by public auction.

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

Reasons for decision

You must pay the GST payable on any taxable supply that you make.

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if you meet all of the conditions (a) to (d) of section 9-5 of the GST Act and your supplies are not GST free or input taxed. Where you do not meet one of the requirements your supply will not be taxable.

In your case, your supply of the land will not be GST free or input taxed and you meet (a) and (c) of section 9-5 of the GST Act. However you are not registered for GST and have contended that the supply of the land will not be in the course of any enterprise conducted by you. Therefore your supply will not be a taxable supply unless the supply is in the course of an enterprise and you are required to be registered for GST. Where you are not conducting an enterprise you will not be required to be registered for GST.

Subsection 9-20(1) of the GST provides that an enterprise includes:

    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; or

Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number considers the meaning of carrying on an enterprise.

It provides that an isolated transaction such as your sale could be an enterprise subject to certain criteria.

Paragraphs 264 to 269 of MT 2006/1 outline factors that indicate whether the activities undertaken are a business or an ‘adventure or concern in the nature of trade’ and state:

    … These factors are as follows: …

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

      ● additional land is acquired to be added to the original parcel of land;

      ● the parcel of land is brought into account as a business asset;

      ● there is a coherent plan for the subdivision of the land;

      ● there is a business organisation - for example a manager, office and letterhead;

      ● borrowed funds financed the acquisition or subdivision;

      ● interest on money borrowed to defray subdivisional costs was claimed as a business expense;

      ● 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.

We consider that you do not meet any of the factors set out above and therefore are not conducting an enterprise when you sell the property. Therefore you are not required to be registered pursuant to section 23-5 of the GST Act and the supply of your property will not be a taxable supply.


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