Edited version of private advice

Authorisation Number: 1051924280416

Date of advice: 18 November 2021

Ruling

Subject: Goods and services tax and supply

Question

Are you liable for goods and services tax (GST), pursuant to section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act),on the sale of X?

Answer

No. The supply of each respective interest in the property by each owner, in their own right, is not made in the course or furtherance of an enterprise that you carry on.

This ruling applies for the following period:

1 July 20XX - 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are the owners (Owners) of the property located at X. The property is more particularly described as X being all of the land comprised in Certificate of Title Volume X (Property). You are as follows:

The Property was originally acquired by X approximately X years ago (circa). X passed away in X.

Each of you are direct descendants of X or widows of direct descendants of X. You passively (never actively) acquired your respective interest(s) in the Property through inheritances/gifts at different times. The Property comprises vacant land.

Set out below is a summary of the current ownership information:

Some of you permanently reside in X.

You are not registered for GST either as a group or individually. You do not carry on an enterprise, either as individuals or as a group, relative to your interest in the Property.

As part of their X re-zoned the Property from rural to residential in or around late X.

In this regard, you advised that:

(a)       the agenda papers for the X referred to a X with respect to the residential zoning;

(b)       subsequent to the City re-zoning the Property, the City advised that in order for it to assess an appropriate level of density and provide certainty on the X, you would need to make an application to re-code the Property; and

(c)       you sought the above certainty to ensure you were aware of what was permissible on the Property and to inform potential buyers of the same.

In or around late X, you made an application to the City to re-code the Property. The X of the Property was changed from X. The permitted use of the Property did not change. Since this time:

(a)       the Property has not been developed or changed in any way save for the inclusion of fire breaks;

(b)       you have not made any applications for subdivision; and

(c)       no buildings have been erected on the Property.

You:

(a)       do not have any relevant knowledge or skills regarding the development of property;

(b)       do not have:

(i)         any oral or written agreement with respect to the use or intention of the Property;

(ii)        a common intention with respect to the Property (until recently);

(iii)      any agreed business plan regarding the Property; and

(iv)      a separate bank account established for the Property;

(c)       have never leased the Property;

(d)       have never derived any income from the Property;

(e)       agree that:

(i)            the expenses for the Property are paid for by the Owners located in X and that reimbursement is sought annually from the Owners living outside of X.

No financial statements for expenses of the Property are prepared; and

(ii)           the proceeds of the sale of the Property will be divided between yourselves proportionate to your respective ownership shares.

You are now considering an offer for the purchase of the Property for an amount of X (Potential Sale Price).

Subsequent to the sale of the Property, you have no intention of engaging in further activities together.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-40