Edited version of your written advice

Authorisation Number: 1051512616348

Date of advice: 02 May 2019

Ruling

Subject: GST and sale of vacant land

Question

Is the sale of your vacant block of land located in Australia a taxable supply?

Answer

No.

A supply is a taxable supply if it meets all the requirements of section 9-5 the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). This section provides:

You make a taxable supply if:

(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 Australia; and

(d) you are registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

In your case you will not be making a taxable supply when you sell the vacant block of land. This is because, based on the information provided, the sale is not in the course or furtherance of an enterprise that you carry on. Hence, you are not liable to pay GST on the sale.

Relevant facts and circumstances

You moved to Australia in a specified year to work.

You purchased a vacant block of land off the plan in Australia (the land) in late 20XX. The purchase price was $X (GST inclusive).

The sale of land was to settle at the end of 20XY when the lot was created and titled. At the time, your intention was to build on the land once it settled and move into the house once the construction was completed sometime in 20XZ. You had previously instructed the conveyancer as such.

You had the funds to complete the purchase in cash, however, you always intended to partially fund the purchase with a loan for better use of capital. You settled on the land with X% equity and X% loan funding in December 20XY and have since put the land on the market for sale.

You advised that your loan application was done verbally and that when you applied for the loan you advised the bank that your intention was to construct a house on the land to live in. The Letter of Offer from the bank shows that the bank offered you $X toward your purchase. The loan repayments of principal and interest were to be made monthly over a period of X number of months.

Before purchasing the land, you purchased an apartment off the plan in Australia in a specified year. You intend to rent out the apartment once it settles in 20XZ.

In October 20XY you were informed by several banks that you would have difficulty obtaining a loan for the purchase of the apartment despite having a loan pre-approval in place since mid-20XY. The reason the banks gave was a change in regulation which restricted lending for apartments like the one you purchased.

You do not have sufficient capital to settle on the apartment as your savings are tied up in the land and the potential construction on it.

In November 20XY, you decided to dispose of the land and use the proceeds to settle on the apartment in order to not forfeit your deposits in the apartment and incur other penalties.

You have not bought and sold properties before.

You are an employee and are not carrying on any other enterprise. You are not registered for GST.

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 9-20.

A New Tax System (Goods and Services Tax) Act 1999 Section 23-5.