Does it attract GST?
Scenario:
We as a proprietary limited company owned a large parcel of rural land that was subdivided and sold. The remaining parcel held is 60 hectares. The previous sales of 40 hectares were made under s 38-480 of the GST Act (sale of farmland). We are applying for a development proposal to subdivide land into two parcels - 57 hectares and 3 hectares. The smaller block has a homestead that is uninhabitable, some farming equipment is stored on it. The area has never been used due to its nature.
Will we incur GST liability for the sale of the 3 hectares subdivision?
Can we continue to apply s38-480 to the 57 hectares lot provided it continues with the farmland characteristics?
Explanation:
The sale of the 3 hectares block with an uninhabitable structure will be treated as a taxable supply, since it is neither the sale of residential premises(input taxed under s40-65) nor farmland on which a farming business will be carried on (GST- free under s 38-480). But if the purchaser intends to carry on a farming business on the land and a farming business was carried on the land for the last 5 years, the sale of the section might be treated as a GST-free supply.
Yes, your company could continue to use s 38-480 provided the condition in the following:
- The land is on which farming activities have been carried for at least the period of five years preceding the supply, and
- The purchaser intends to carry on a farming business on the land after the purchase.