Edited version of private advice

Authorisation Number: 1051960196386

Date of advice: 10 March 2022

Ruling

Subject: GST and the sale of vacant land

Question

Was the sale of the vacant land located in the indirect tax zone (the Property) a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. Your sale of the Property was not a taxable supply because the sale was not made in the course or furtherance of an enterprise that you carried on and you were neither registered nor required to be registered for GST at the time of the supply; therefore, GST is not payable on the sale of the Property.

This ruling applies for the following period:

1 July 20XX - 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Person A and Person B (You) are siblings.

You are not registered for GST as a partnership or individually, nor have you been registered for GST in the past.

You have not carried on a business of buying and selling land or property development in the past as a partnership or individually.

In MM/YYYY your parent, X, acquired a property located at X known as Lot X on DPXXX (the Property) for $X.

The Property comprises an area of approximately X hectares and was used by your parent as a hobby farm until your parent passed away on DD/MM/YYYY.

Your parent's estate was distributed pursuant to Letters of Administration and you acquired the Property as tenants in common in equal shares.

Since inheriting the Property, no improvements have been made and only nominal activities, such as lawn mowing, have been conducted on the land.

There are no buildings or substantial and permanent structures on the Property.

You have not developed or subdivided the Property and the land has not been used by you for any commercial or income producing activity.

In MM/YYYY you made a decision to sell the Property and you engaged a real estate agent to sell the Property.

You decided to sell the Property to avoid the costs of holding the land and to make funds available for you to purchase your own residential property.

On DD/MM/YYYY you entered into a Contract for the sale of the Property with X (Purchaser). The contract price was $X.

The sale of the Property was granted through a Put and Call Option Deed (Deed).

Clause X of the Deed states:

The Vendor grants the Purchaser the right to lodge any application with Council or any other authority in relation to development of the Property and will sign a document to this effect, as attached to this Deed, on the date of this Deed, or as otherwise suitable to the Purchaser, within three (3) Business Days of the date of this Deed. The Vendor will sign all applications, consents, plans, documents, or instruments as landowner reasonably required by the purchaser.

Clause X of the Deed states:

The Vendor will provide all reasonable assistance required by the Purchaser from time to time in relation to the proposed development of the Property. The Vendor will not be required to pay any fees or incur any expense in providing such assistance.

Clause X of the Deed states:

The Vendor acknowledges that the Purchaser will be developing the Property and may sell the lots in a draft plan of subdivision of the Property prior to completion of the Contract. The Purchaser shall be entitled to display signs and access the Property for the purpose of proceeding with its sales, such access to be between the hours 8.00am to 5.00pm each day (or such other hours as are required by any relevant authority or agreed between the parties).

The sale of the Property settled in MM/YYYY.

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 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 195-1