| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051628772704
Date of advice: 21 January 2020
Ruling
Subject: GST and sale of a vacant land
Question
Will the Sale of the vacant land by the entity be subject to GST?
Answer
No. The sale is not subject to GST as the entity is not registered or required to be registered for GST. The sale of the vacant land is a mere realisation of a capital asset, therefore the entity is not required to be registered for GST.
The scheme commences on:
19 November 2019
Relevant facts and circumstances
· The entity owns a vacant land.
· There are no marked roads on the property. There is no formal gazetted road access. There has never been any activity or improvements on the vacant land.
· The land was transferred to the company from an associated party who is now deceased. The intention was to hold and sell for capital growth, not develop.
· The land was purchased in 19XX and the purchase price is unknown.
· There was no finance obtained for the purchase, the land transferred into the entity's name for no physical consideration.
· The original zoning was rural. The company is unaware of any rezoning and there are no applications currently in place.
· There was never any intention to use the property for commercial or private use. The property is not listed as an asset of a partnership or any other entity.
· The property, nor any part of it, has ever been used for income producing purposes since its acquisition. No costs of holding or maintaining the property have even been claimed. No interest on loans has been claimed as an income tax deduction and no loans have ever been in place in relation to the land.
· No steps have been taken to subdivide the land, such as obtaining advice from professionals or applying for planning permission from the relevant authorities.
· No agent has been engaged to see the property but the directors of the company are always engaging with interested parties to sell. No offers have even been made or any offer declined.
· Several of the directors are of retirement age and want to dispose of the property and deregister the company.
· The entity has not ever carried on an enterprise, nor has the entity ever been registered for GST.
· There have never been any sale contract or sale advertisements for the land to provide copies of.
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
A New Tax System (Goods and Services Tax) Act 1999 Section 188-10