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Edited version of your written advice
Authorisation Number: 1051338057412
Date of advice: 14 February 2018
Ruling
Subject: GST and the sale of farmland
Question
Will your supply of the portion of your property located in Australia, 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
You are a trust and are registered for GST.
You acquired a property on ddmmyyyy. You have operated a dairy farming business continuously on the property since you acquired it. The property contains a house and land on which the dairy farm is operated.
You have subdivided off a section of the property. This area of the property contains the house and some of the farmland. You plan to sell this piece of land to a purchaser who will live in the house and operate a farming business on the land from the date of purchase.
The purchaser will be registered for GST on the settlement date.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 34-480
Reasons for decision
In this reasoning, unless otherwise stated,
● all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
● all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act
A supply of farmland will be GST free under section 38-480 in the following circumstances:
● the land is land on which a farming business has been carried on for the period of at least 5 years preceding the supply and
● the recipient of the supply intends that a farming business be carried on, on the land.
“Farming business” is defined in subsection 38-475(2) to include maintaining animals for the purposes of selling them or their bodily produce. A dairy farm meets this definition of farming business.
Therefore your supply of the portion of the property will meet the criteria of 38-480 in that:
● You will have carried on a farming business for at least the 5 years preceding settlement date, and
● The recipient of the supply intends that a farming business will be carried on from the date of purchase.