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Edited version of your written advice
Authorisation Number: 1012984309126
Date of advice: 14 March 2016
Ruling
Summary: Are sales of subdivided lots of land subject to goods and services tax (GST)
Question:
Are the sales of the subdivided lots of land by you subject to goods and services tax (GST)?
Answer
No, the sales of the subdivided lots of land are not subject to GST.
GST is payable on a taxable supply. You make a taxable supply if all the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied as follows:
(a) you make the supply for consideration;
(b) the supply is made in the course or furtherance of an enterprise that you carry on;
(c) the supply is connected with the indirect tax zone (Australia), and
(d) you are registered or required to be registered.
However, a supply is not a taxable supply to the extent that it is GST-free or input taxed.
The supply of the sales of the subdivided lots of land will be taxable if it meets all the requirements in section 9-5 of the GST Act.
Based on the information provided, your sales of the subdivided lots of land do not satisfy all the requirements of a taxable supply under section 9-5 of the GST Act because:
(i) your activity of selling land does not constitute the carrying on an enterprise; and
(ii) you are neither registered nor required to be registered for GST.
Accordingly, your sales of the subdivided lots of land are not a taxable supply and are not subject to GST.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are not registered for GST. You purchased a property at in December XXXX. No GST was included in the price of your purchase.
The property is an area of X.XXX hectares square metres of land with a house on it. You have occupied the house on the property as your family home since XXXX. The vacant land was always used by you for private purpose. You have not carried out any business on the vacant land.
You are planning to subdivide the property in to X lots. You will keep one lot with house on it. Your intention is to sell the other lots.
The level of activities undertaken for the subdivision will be minimal, limited to development work to meet the council requirements.
You advise that the disposal of subdivided lots of land will not be conducted in the manner of an enterprise but rather in a manner necessary for you to fund your daily needs.
You do not have a documented business plan, and there is no organisation set-up for the subdivision and sales of the lots of land.
You have not accounted for the property as a business asset or expense. You have not claimed any deductions for the purchase of the property or any subdivision costs for income tax purposes.
The property has not been used to conduct a business. The vacant land was always used by you for private purposes. You have not carried out any business on the vacant land.
You are not carrying out an enterprise of buying and selling the property. This is a one off the transaction.
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 9-25
A New Tax System (Goods and Services Tax) Act 1999, Section 23-5
A New Tax System (Goods and Services Tax) Act 1999, Section 40-40