Edited version of private advice

Authorisation Number: 1051798450919

Date of advice: 27 January 2021

Ruling

Subject: Goods and services tax and sale of vacant land

Question 1

Are you entitled to cancel your GST registration from 1 July xxxx under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

Section 23-5 of the GST Act provides that an entity is required to be registered for GST where it is carrying on an enterprise and its GST turnover meets the registration turnover threshold which currently is AU$75,000 (AU$150,000 for non-profit organisation).

Based on the information given, your current and expected annual turnover was below the GST registration threshold of AU$75,000 when you requested the cancellation of your GST registration. In that case, you were entitled to cancel your GST registration from 1 July xxxx as you were not required to be registered for GST under section 23-5 of the GST Act.

Question 2

Is your sale of the subdivided vacant land located in Australia subject to GST under the GST Act?

Answer

No. Your sale of the vacant land is not subject to GST as you were not registered for GST and were not required to be registered for GST under section 23-5 of the GST Act at the time the sale was made.

From the information given, when you sold the vacant land you did not expect to receive any income after the sale and your directors intend to wind the company after the sale. In this instance, your projected annual turnover was below the GST registration threshold at the time the sale took place.

Accordingly, you were not required to be registered for GST at the time the sale took place under section 23-5 of the GST Act. Your sale of the vacant land was therefore not subject to GST as you were neither registered nor required to be registered for GST.

Relevant facts

You are an Australian company and were registered for GST. For some time you have not received any income and have reported nil income in your BAS. You cancelled your GST registration because your GST turnover was below the GST registration threshold and do not want to be registered for GST. Your GST registration was cancelled effective from 1 July 20xx.

You acquired a vacant land in 19xx. The development zone for the land is low density residential.

After your acquisition and up to 1 July 20XX you subdivided the vacant land into ten Lots and sold nine of the subdivided lots. From 1 July 20XX the remaining subdivided land (Lot 10) remained vacant land.

Lot 10 was sold in 20xx. No GST was collected on the sale. You advised that no subdivisions have been made on Lot 10 when sold.

After selling Lot 10 you do not hold any other assets. You have no intention of acquiring any income producing assets or deriving revenue from any other activities after the disposal of Lot 10.

You are currently registered with ASIC and the directors intend to wind you up as early as practicable since they need to prepare your final accounts and lodged your tax return.

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 23-5

A New Tax System (Goods and Services Tax) Act 1999 section 25-5