Will GST be payable under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 on your sale of the property known as (property address)?
No. This ruling applies for the following : 1 July 2025 to 30 June 2029 The scheme commences on: 15 September 2025
You are the trustee of a complying superannuation fund. You are not registered for GST. You are not in breach of the SISA. You purchased a X acre rural block of land in Australia (the property) on (date) for (amount) plus costs purely as an investment. The closest towns are X and Y - these towns are about X to Y kms away from the property. You purchased the property with the hope that the market value of the property would increase over the long term. You did not borrow money to purchase the property. The community title plan number is (number) You have paid rates and taxes and community title contributions since purchase. There have been no improvements to the property apart from boundary fencing to demonstrate the boundary of the property. The fencing has not been completed. The property has not been subdivided. You have not applied for D.A. approval to develop or subdivide the property. The property was rezoned from rural land to vacant land, but you did not request this rezoning and you had nothing to do with it. You now desire to sell the property for (price) The only income you earn is interest income. You do not have plans to buy another property.
You are considering buying shares in companies listed on the stock market, but you have not decided on this for certain.
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 23-5 A New Tax System (Goods and Services Tax) Act 1999 40-5 A New Tax System (Goods and Services Tax) Act 1999 Division 188
Summary GST is not payable on the sale of the property as you are not registered or required to be registered for GST. You are not required to be registered for GST because your GST turnover does not meet the registration turnover threshold. The sale of the property does not count towards your projected GST turnover as it is a sale of a capital asset. Sales of capital assets are excluded from projected GST turnover. Detailed reasoning GST is payable by you on your taxable supplies, if any. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if: (a) you make the supply for consideration (b) the supply is made in the course or furtherance of an enterprise that you carry on (c) the supply is connected with the indirect tax zone (essentially Australia), and (d) you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. You meet the requirements of paragraphs 9-5(a) and 9-5(c) of the GST Act as you are selling the property for consideration and the property is located in Australia.
There are no provisions of the GST Act under which your sale of the property is GST-free or input taxed. In accordance with paragraph 9-20(1)(da) of the GST Act, the activities carried on by the trustee of a complying super fund are an enterprise. You are the trustee of a complying super fund. Therefore, all of your activities are enterprise activities. Hence, your sale of the property will be a supply you make in the course or furtherance of an enterprise that you carry on. Therefore, the requirement of paragraph 9-5(b) of the GST Act is met. You are not registered for GST. What remains to be determined is whether you are required to be registered for GST. Section 23-5 of the GST Act provides that you are required to be registered for GST if: (a) you are carrying on an enterprise; and (b) your GST turnover meets the registration turnover threshold of AUD $75,000 Division 188 of the GST Act sets out how to determine GST turnover.
In accordance with section 188-10 of the GST Act, you have a GST turnover that meets a particular turnover threshold if your current GST turnover is at or above the turnover threshold unless it can be determined that your projected GST turnover is below the turnover threshold. Only supplies made by the entity potentially count towards the registration turnover threshold. In accordance with subsection 188-20(1) of the GST Act, input taxed supplies are excluded from projected GST turnover. You earn interest income, but this is excluded from projected GST turnover as it is income from a financial supply, which is input taxed under section 40-5 of the GST Act. Also, any shares you sell in companies listed on the stock market are excluded from projected GST turnover as these sales would be input taxed financial supplies. Member contributions to the superfund do not count towards projected GST turnover because they are consideration for financial supplies, and financial supplies are input taxed. Dividends from shares do not count towards the registration threshold, as they are not consideration for supplies.
In accordance with paragraph 188-25(a) of the GST Act, sales of capital assets are excluded from projected GST turnover. We shall now determine whether your sale of the property will be a sale of a capital asset as sales of capital assets are excluded from projected GST turnover. Paragraphs 258 to 260 of MT 2006/1 briefly distinguish between trading/revenue assets and investment/capital assets. They state: Trade v. investment assets 258. United Kingdom cases categorise assets as either trading assets or investment assets. Assets purchased with the intention of holding them for a reasonable period of time, to be held as income producing assets or to be held for the pleasure or enjoyment of the person, are more likely not to be purchased for trading purposes. 259. Examples of investment assets are rental properties, business plant and machinery, the family home, family cars and other private assets. The mere disposal of investment assets does not amount to trade. 260. Assets can change their character but cannot have a dual character at the same time.
Paragraphs 249 to 257 set out more factors that assist in determining whether an asset is a revenue/trading asset or instead an investment/capital asset. They state: The length of period of ownership 249. A trading asset is generally dealt with or traded within a short time after acquisition. 250. An example is the case of Edwards (Inspector of Taxes) v. Bairstow and Another where the taxpayers purchased a complete cotton spinning plant in 1946 with the object of selling it as quickly as possible at a profit. They had no intention of holding it by using it as an income producing asset and it was not purchased for their pleasure or enjoyment. It was eventually sold in five separate lots over a fifteen month period. The frequency or number of similar transactions 251. The greater the frequency of similar transactions the greater the likelihood of trade. Supplementary work on or in connection with the property realised 252. Improving property beyond preparing an asset for sale, to bring it into a more marketable condition and gain a better price suggests an element of trade. The circumstances that were responsible for the realisation
253. Trade involves operations of a commercial character. As assets can be sold for reasons other than trade, the circumstances behind the sale need to be considered. For example, a quick resale may have occurred as a result of sudden financial difficulties. Motive 254. If the activities on an objective assessment have the characteristics of trade, the person's motive is not relevant. It is relevant in those cases where the evidence is not conclusive. An intention to resell at the time of acquisition may be an indicator of the resale being an adventure or concern in the nature of trade. 255. Motive is also important in cases if there is a change in character of the asset. For example, a trading asset becoming an investment asset when the person decides to keep the asset, either for income producing purposes or personal enjoyment. 256. An example of a case where motive was one of the matters that lead to the conclusion that there was an adventure or concern in the nature of trade is Johnston v. Heath.
Heath was offered non-income producing land that had planning permission but had not been developed because of drainage difficulties. He had insufficient funds to purchase the land and his intention was to resell the land as soon as possible after acquisition. The lack of funds was not an obstacle to the purchase, as Heath found a buyer for the land before he contracted to buy it from the original owner. The land was purchased and sold. 257. In Wisdom v. Chamberlain
Wisdom had assets worth between £pound;150,000 and £pound;200,000 and was concerned about a devaluation in sterling. His accountant considered that silver bullion would be a suitable hedge against devaluation. Silver bullion of £pound;200,000 was eventually purchased using borrowed funds rather than realising existing assets. The devaluation did not occur and a profit of £pound;48,000, after deducting interest of £pound;7,000, was made on disposal of the silver bullion. There was a transaction entered into on a short-term basis for the purpose of making a profit out of the purchase and sale of a commodity. If Wisdom had disposed of his existing investment assets to finance the purchase then the case may have been different. The purchase of the silver bullion may then have been an investment transaction rather than a trading transaction. Paragraphs 262 to 266 of MT 2006/1 set out factors to assist in determining whether a one-off or isolated real property transaction involves activities of a revenue nature or instead is the mere realisation of a capital asset. These paragraphs focus on property subdivisions. They state: Isolated transactions and sales of real property
262. The question of whether an entity is carrying on an enterprise often arises where there are 'one-offs' or isolated real property transactions. 263. The issue to be decided is whether the activities are an enterprise in that they are of a revenue nature as they are considered to be activities of carrying on a business or an adventure or concern in the nature of trade (profit making undertaking or scheme) as opposed to the mere realisation of a capital asset. (In an income tax context a number of public rulings have issued outlining relevant factors and principles from judicial decisions. See, for example, TR 92/3, TD 92/124, TD 92/125, TD 92/126, TD 92/127 and TD 92/128.) 264. The cases of Statham & Anor v. Federal Commissioner of Taxation ( Statham ) and Casimaty v. FC of T ( Casimaty
) provide some guidance on when activities to subdivide land amount to a business or a profit-making undertaking or scheme. In these cases, farm land was subdivided and sold. Minimal development work was undertaken to meet council requirements and to improve the presentation of certain allotments. On the particular facts of these cases the courts held that the sales were a mere realisation of a capital asset. 265. From the Statham and Casimaty cases a list of factors can be ascertained that provide assistance in determining whether activities are a business or an adventure or concern in the nature of trade (a profit-making undertaking or scheme being the Australian equivalent, see paragraphs 233 to 242 of this Ruling). If several of these factors are present it may be an indication that a business or an adventure or concern in the nature of trade is being carried on. These factors are as follows:] • there is a change of purpose for which the land is held; • additional land is acquired to be added to the original parcel of land; • the parcel of land is brought into account as a business asset; • there is a coherent plan for the subdivision of the land;
• there is a business organisation - for example a manager, office and letterhead; • borrowed funds financed the acquisition or subdivision; • interest on money borrowed to defray subdivisional costs was claimed as a business expense; • there is a level of development of the land beyond that necessary to secure council approval for the subdivision; and • buildings have been erected on the land. 266. In determining whether activities relating to isolated transactions are an enterprise or are the mere realisation of a capital asset, it is necessary to examine the facts and circumstances of each particular case. This may require a consideration of the factors outlined above, however there may also be other relevant factors that need to be weighed up as part of the process of reaching an overall conclusion. No single factor will be determinative rather it will be a combination of factors that will lead to a conclusion as to the character of the activities.
After considering the factors set out above from MT 2006/1 and other relevant factors, we conclude that your sale of the property will be the mere realisation of a capital/investment asset because of the following circumstances together: • You acquired the property as an investment. You held the property with the hope of enjoying long term appreciation in market values of properties in the area. • You did not purchase the property near an urban fringe. • You did not borrow money to purchase the property. • You held the property for a long period of time - approximately X years. • There was no change in the purpose for which you held the property. • You did not erect buildings on the property. • You did not develop the property other than erecting a fence, which was done to demonstrate the boundary of the property. • You did not subdivide the property. • You did not seek a DA approval to develop or subdivide the property and you did not seek a rezoning of the property and had nothing to do with the rezoning of the property.
• There is no repetition to your property selling activity and you have no current plans to buy another property. (*Note that a one-off property sale with a commercial flavour would be of a revenue nature, despite the lack of repetition) As your sale of the property will be the sale of a capital asset, it is excluded from projected GST turnover. Your projected GST turnover is zero. Therefore, you are not required to be registered for GST. As you are not registered or required to be registered for GST, the requirement of paragraph 9-5(d) of the GST Act is not met, and therefore, GST is not payable on your sale of the property.