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Edited version of your written advice
Authorisation Number: 1013105184199
Date of advice: 12 October 2016
Ruling
Subject: Whether the sale of vacant land is a taxable supply
Question 1
Is the sale of vacant land located in a state of Australia (property) by you a taxable supply?
Answer
No, the sale of the property does not meet the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) because the supply was not in the course or furtherance of an enterprise that you carry on.
The term 'enterprise' is defined in section 9-20 of the GST Act as 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
● on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property; or …
Note that defined terms are identified by an asterisk.
The property has not been used for income producing purposes since about Year Y either by you or by you and your spouse in partnership so it has not been used in a business or in an enterprise of leasing property in that time.
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 in paragraphs 262 to 270 considers in what circumstances an isolated real property transaction can be an enterprise. None of the factors in paragraph 265 apply to your situation as the property is vacant land which has not been developed, improved or subdivided by you.
The sale of the property will not be an enterprise, or part of an enterprise, in the form of an adventure or concern in the nature of trade.
The sale of the land was not made in the course or furtherance of an enterprise that you carry on, the requirement of subparagraph 9-5(b) of the GST Act is not satisfied and so the sale will not be a taxable supply under section 9-5 of the GST Act.
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 registered for GST.
You are carrying on an enterprise of leasing commercial property.
In Year X you and your spouse (spouse), purchased a property located in a state of Australia (property).
The property was rented out from Year X to about Year Y when it ceased to be rented out and the house and building on the property were demolished.
From the time the house and building were demolished the property has been vacant land and not been used for any income producing purpose. It has not been improved.
You and your spouse took steps towards subdividing the property but the subdivision was not completed.
In Year Z your spouse died and you became the sole owner of the property by survivorship.
You intend to sell the property and it will be sold as one lot.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
● Section 9-5
● Section 9-20