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Edited version of private advice
Authorisation Number: 1051848593156
Date of advice: 11 June 2021
Ruling
Subject: GST and sale of real property
Question
Were you, the named entity, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) when you sold the subdivided land located at the specified address in Australia (the Property)?
Answer
No, you were not making a taxable supply under section 9-5 of the GST Act when you sold the Property. This is because we consider the activities you carried on in the subdivision and sale of the Property did not amount to an enterprise for GST purposes. Accordingly, GST was not payable on the sale.
Relevant facts and circumstances
You (the named entity) are an individual entity. You are not registered for the goods and services tax (GST) and do not have an Australian business number (ABN).
In yyyy, you and your then spouse bought a property located at the specified Australian address and lived in it continuously as your family residence until yyyy when you became the sole owner. You continued to live at the property until around mmyyyy at which time the house had progressively fallen into disrepair. Due to your age, health and financial issues you were not able to repair the house to make it habitable again and you moved out.
Your family advised that selling the rear of the property would be the best way and the only way that would enable you to build at the front of the property and continue to live at the same location. You borrowed money from a family member in an informal family arrangement to fund the demolition and subdivision works to create two lots, being:
• the address of lot A (Lot A),
• the address of lot B (Lot B)
The property identifiers of the land sold, as shown on the duplicate certificate of title includes:
• Registered proprietor: your name
• Volume nnnn Folio nnn
• Land description: Lot nnn on Deposited Plan nnnnnn
In mmyyyy you sold Lot B as vacant land. The relevant sale contract states the purchase price is $X. It is your intention to use the sale proceeds towards building your new home at Lot A.
You are retired and not carrying on any enterprise. You have not carried on development of any property for the purpose of sale or lease or other purposes, either in your own capacity or in the capacity of a related entity.
Some details of all the properties you own or have previously owned are summarised in the table below:
|
Address |
Owner(s) |
Description of property |
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Division 38
A New Tax System (Goods and Services Tax) Act 1999 Division 40
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 section 9-40
A New Tax System (Goods and Services Tax) Act 1999 subsection 9-20(1)