Will your sale of the subdivided lot to your parents be a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
No. Based on the information provided, the activities undertaken that will lead to the sale of the subdivided lot to your parents do not constitute a business or an adventure of concern in the nature of trade. The sale will be mere realisation of a capital asset. Therefore, the sale will not be made in the course or furtherance of an enterprise that you carry on. Accordingly, the sale will not be a taxable supply under section 9-5 of the GST Act. This ruling applies for the following period 1 July 20XX - 30 June 20XX
You acquired a property located in Australia in late 20XX. The property is a single residential lot on which contains a standalone detached house. The purchase price of the property was $X million partly funded by a bank loan In early 20XX, you moved into the property which has become your principal place of residence. Shortly after, you made to apply for a planning permit after engaging an architect to develop design concepts for dual dwellings for you and your parents. The dwellings will be built after subdividing the Property into two lots. After finalising the design with the architect, the application for a planning permit was lodged in 20XX. The permit was granted in 20XX. You lived in the property until early 20XX after which you moved back to your parents' house to save funds for the construction. You leased the property from early 20XX to middle of 20XX as a temporary measure to assist with the funding of future construction costs. You do not own or derive rental income from any other property.
You acquired the services of two entities for the subdivision process and for the construction of the dwellings. Construction will begin in early 20XX with framing expected to be completed around middle of 20XX after which, the property will be subdivided. You will retain one of the dwellings as your principal place of residence and sell the second one to your parents. An off-the-plan contract between you and your parents is currently drafted for the proposed sale of the second subdivided lot at an independently assessed market value. The sale is part of a private family arrangement to enable you and your parents live nearby. This is the first and only subdivision activity that you have engaged in. You have never operated a business of land development, nor have been involved in any previous land or property development activities.
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 40-65