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Edited version of your written advice
Authorisation Number: 1012841439187
Date of advice: 16 July 2015
Ruling
Subject: GST and compulsory acquisition of land
Question 1
Will you make a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 when your land is compulsorily acquired?
Answer
No
Relevant facts and circumstances
You are registered for GST.
In YYYY you acquired land.
You always intended to develop the Land and received approval to construct residential apartments on the Land.
You were advised of the intention to compulsorily acquire your interest in the Land by letter dated YYYY.
Your interest in the Land was compulsorily acquired on YYYY.
At no time did you approach or engage with an entity requesting that the Land be compulsorily acquired.
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 9-10.
Reasons for decision
In this ruling, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise specified.
Section 9-5 of the GST Act outlines the conditions that must be satisfied in order for a 'taxable supply' to be made. The first requirement of paragraph 9-5(a) is that you must make a supply. 'Supply' has the meaning given by section 9-10 and is any form of supply whatsoever.
Goods and Services Tax Ruling GSTR 2006/9 GST: supplies (GSTR 2006/9) provides guidance in relation to the identification of supplies. Land acquisitions by government authorities are discussed in paragraphs 80 to 84 of GSTR 2006/9. Paragraph 82 states that in cases where land vests in the authority as a result of the authority seeking to acquire the land, and initiating the compulsory acquisition process pursuant to its statutory right, then the owner does not make a supply because it takes no action to cause its legal interest to be transferred or surrendered to the authority.
You did not take any action to initiate the compulsory acquisition of your Land. Therefore, you did not make a supply of your land and consequently you are not making a taxable supply for the purposes of the GST Act.