Any GST liability incur when selling farmland?


Q: A proprietary limited company owned a large parcel of rural zoned land that was subdivided and sold. The remaining parcel held is 60ha. The previous sales of 40ha were done under s 38-480 of the GST Act (sale of farmland). The client is obtaining a development application to subdivide the balance lot into two parcels- 57ha and 3ha. The 3ha block has a homestead that is uninhabitable, some farming equipment are on it. The area has never been used due to its nature. Will the company incur GST liability for the sale of the 3ha subdivision? Can the company continue to apply s38-480 to the 57ha lot provided it continues with the farmland characteristics?


A: The sale of the 3ha 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, the company could continue to use s 38-480 provided the condition in the following:

  • The land is land on which farming business have been carried on for at least the period of five years preceding the supply, and
  • The purchaser intends to carry on a farming business on the land following purchases.


Written by Panbo Ye

I help people discover POWERFUL unknowns in Tax Ideas | Wealth Strategies | Retirement Planning | Finance Solutions!

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