| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052119985474
Date of advice: 23 June 2023
Ruling
Subject: GST and the sale of an investment asset
Question
Is your supply of the vacant land to a third party a taxable supply?
Answer
Your supply of the Vacant Land to a third party is not made in the course or furtherance of an enterprise that you carry on for GST purposes. Hence the sale of the Vacant Land is not a taxable supply. You are not required to remit 1/11th of the sale price to the Australian Taxation Office (ATO).
A supply will be a taxable supply where the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied. Section 9-5 of the GST Act states:
You make a taxable supply if:
(a) you make the supply for consideration; and
(b) the supply is made in the course or furtherance of an enterprise that you carry on; and
(c) the supply is connected with the indirect tax zone; and
(d) you are registered or required to be registered.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed
(* denotes a defined term under section 195-1 of the GST Act)
Since the supply of the Vacant Land is not made in the course or furtherance of an enterprise that you carry on, the sale of the Vacant Land is not a taxable supply.
Relevant facts and circumstances
You have an ABN and are registered for GST for your enterprise.
You have never carried on an enterprise of land development. No entities that you, own, control, or are controlled or owned by your associates, has been involved in the ownership of vacant land or any aspect of land or property development.
You have an enterprise of leasing residential accommodation. You accounted for income and expenses in your income tax returns.
You bought the Vacant Land many years ago and planned to build a house for your retirement. You were granted a Development Application. However, your health deteriorated, and you had to sell the Vacant Land due to financial circumstances.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 (GST Act)