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Edited version of your written advice
Authorisation Number: 1051389354502
Date of advice: 22 June 2018
Ruling
Subject: GST and the sale of property by a deceased estate
Question
Are the sales of the subdivided vacant blocks of land by you (a trustee of a deceased trust) a taxable supply for GST purposes?
Answer
No.
One of the requirements under the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) for a supply to be a taxable supply is that the supply is made in the course of an enterprise being carried on by the supplier. Based on the information provided it is the Commissioners’ view that you are not considered to have sold the vacant blocks of land in the course of an enterprise that you were carrying on. Accordingly, the sales of the subdivided vacant blocks are not considered to be a taxable supply for GST purposes and as such no GST is payable on the sale of these blocks.
Relevant facts and circumstances
You are the trustee of a deceased estate.
The deceased estate included large block of land with a house built by the deceased.
The deceased did not carry on any enterprises whilst they were alive.
Although some beneficiaries were struggling financially, it was the desire of all beneficiaries to maintain ownership within the family group of the house built by their deceased parent. One way the estate could provide some beneficiaries with a monetary payment whilst also maintaining ownership of the family house was to subdivide the block into a number of lots.
The block with the house was to be retained by one beneficiary, whilst the remaining vacant blocks would be sold and the net proceeds split amongst the other beneficiaries.
The reason for the subdivision and sale of the newly subdivided parcels was to be able to maintain the house built by the beneficiaries' parent within the family group whilst also allowing for a monetary distribution to flow to beneficiaries in financial need.
The subdivision was not undertaken for the purpose of making a profit and was never considered to be an enterprise in any sense. The house simply holds a very special place in the family's hearts as it was built by their deceased parent, and the only way they could afford to keep it was to subdivide and sell some part of the property.
No buildings were constructed on any of the subdivided blocks. Only the minimal work that is required by the relevant council was undertaken as part of the subdivision.
The subdivided blocks of vacant land have already been sold and settled by you.
When the blocks were sold no GST was included in the sale prices as you self-assessed that you were not carrying on an enterprise.
Relevant legislative provisions
Section 9-5 of the A New Tax (Goods and Services Tax) Act 1999