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This edited version has been archived due to the length of time since original publication.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

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Edited version of your written advice

Authorisation Number: 1012814640743

Ruling

Subject: GST and the supply of farmland

Question

Will the supply of the Land by Entity A to Entity B, be a GST-free supply pursuant to section 38-480 of the A New Tax System (Goods and Services Tax) Act 1999?

Answer

Yes

Relevant facts and circumstances

Entity A registered for GST. It has a freehold interest in land located in Australia, (the Land).

The Land forms part of a larger farming property. A cattle farming business has been carried out on the Land for at least 5 years.

Entity A entered into a contract to sell the freehold interest in the Land to Entity B. Entity B will allow the farming business to be carried on after settlement of the Contract under an informal arrangement.

There are no residential premises located on the land.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 38-475 and

A New Tax System (Goods and Services Tax) Act 1999 Section 38-480.

Reasons for decision

    • all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

    • all reference materials referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au

    • all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act

Section 38-480 provides that:

The supply of a freehold interest in, or lease by an Australian government agency of or the long term lease of, land is GST-free if:

    a. The land is land on which a farming business has been carried on for at least the period of 5 years preceding the supply; and

    b. The recipient of the supply intends that a farming business be carried on, on the land.

The term farming business is relevantly defined in sub-section 38-475(2) maintaining animals for the purpose of selling them or their bodily produce (including natural increase).

The Land will be sold freehold

Is land on which a farming business has been carried on for at least the period of 5 years preceding the supply and

The recipient of the supply intends that a farming business will be carried on after settlement.

Therefore the supply of the Land by Entity A to Entity B will be GST-free pursuant to section 38-480.


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