Edited version of private advice

Authorisation Number: 1052395073202

Date of advice: 13 May 2025

Ruling

Subject: GST - sale of vacant subdivided lots of land

Question 1

Is the Trustee (you) carrying on an enterprise under the GST Act?

Answer 1

Yes, you are carrying on a leasing enterprise under the GST Act.

Question 2

Will your disposal of the vacant lot at X (Vacant Lot) be subject to GST?

Answer 2

No, the disposal of the Vacant Lot is not subject to GST.

Question 3

Will you need to register for GST?

Answer 3

No, you will not need to register for GST due to the sale of the Vacant Lot.

Question 4

Will the disposal of the Vacant Lot be a mere realisation of a capital asset?

Answer 4

Yes, the disposal of the Vacant Lot is a mere realisation of a capital asset.

Although you are carrying on an enterprise as an SMSF, you are not required to be registered for GST. The sale of the Vacant Lot will not be included in your GST registration turnover threshold calculation as it is excluded as the sale of a capital asset.

Relevant facts and circumstances

You are a complying self-managed superannuation fund (SMSF) within the meaning of the Superannuation Industry (Supervision) Act 1993.

You are not and have never been registered for GST.

You acquired X residential properties in Australia in the year XXXX and derive residential rent from these properties.

You acquired the first property situated at (the Property) for $Y. The Property has a land size of approximately AAA square meters.

You acquired the second property located at (second property) for $Z. It is BBB square meters in land size.

Both properties have been leased since ownership started.

The Property is rented for $C pw. The second property is rented at $D pw. The rental properties are both managed via a real estate agent.

Intention to develop the Property into two lots

You plan for the subdivision of the Property is to release equity and provide liquidity for the Trustees' future retirement purposes. The Property had an unused garden area, which was of little use, and the Property would benefit from a subdivision, while adding income to the fund.

The subdivision plan for the Property states 'general residential use'.

In 2XXX, you discussed with the local real estate agent about the subdivision project. You decided that the Property would be subdivided into X lots: the vacant lot (Vacant Lot) at the rear of the Property, and the rental lot which contains the existing house. The existing house on the rental lot will continue to be rented out. Only the Vacant Lot will be sold.

You were advised that it would be easier to sell the Vacant Lot if water and sewerage mains and power connections were constructed, thus making the Vacant Lot a more attractive purchase for a potential buyer

In 2YYY, you engaged surveyor to undertake surveying and to begin the planning permit for the subdivision.

The subdivision was completed in 2ZZZ, and the Vacant Lot is now on the market for sale.

The final costs incurred for the subdivision is $E, this amount includes council planning permits, electricity pits, stormwater drains, water mains and sewerage.

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 subsection 9-20(1)

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

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

A New Tax System (Goods and Services Tax) Act 1999 subsection 188-10(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 188-15(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 188-20(1)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 188-25(a)