Edited version of private advice

Authorisation Number: 1051789659299

Date of advice: 11 December 2020

Ruling

Subject: Taxable supply of interest in property

Question

Is the sale of your interest in the land a taxable supply pursuant to section 9-5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the sale of your interest in the land is not a taxable supply as not all the requirements under section 9-5 of the GST Act are met.

This ruling applies for the following period:

1 July 20XX - 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

xxx (you) are not registered for GST.

In XX/month/XXXX you purchased land located at xxx (Property) with your friend xxx. You and xxx contributed an equal share of funds to the purchase and are listed on the title as tenants in common, each with a 50% share.

In month/XXXX you entered into a contract of sale to sell your interest in the Property for $xxx to xxx (purchaser). Settlement is due on xxx.

The Property at the time of purchase was zoned as rural.

The Property is currently zoned as an urban growth zone. You did not apply to the council to have zoning changed, rather it happened in the natural course of Melbourne's urban development.

During our phone conversation on xxx, you advised us of the following:

•         You are selling your interest in the Property due to increasing holding costs and a desire to release invested capital.

•         You bought the Property as an investment.

•         You borrowed funds to purchase the Property, the loan was a residential investment loan (not commercial).

•         You have not made any improvements to the Property other than the upkeep required by council.

•         When purchasing the Property and during your ownership of interest in the Property you had no official business plan. You had considered using the Property to build a house with your spouse. However, you did not proceed as you were unable to subdivide the land.