Q: Section 38-480 states that the land must have been used for farming for at least five years before the sale to qualify for GST-free status. What happens if the farming business has stopped, even though the land was a farm for longer than five years? This concerns a large farming property in the Northern Territory that has been divided into smaller parcels. The head of the family managed the farming and subdivision but passed away unexpectedly about 18 months ago, after which the farming business wasn't actively pursued.
A: Both GST-free sales of farmland (under section 38-480) and GST-free sales of a going concern (under section 38-325) require the farming business to be active up to the sale date. Since the farming business ceased before the sale, it doesn't qualify for GST-free status. However, while the sale would incur GST, the buyer can later claim this GST as an input tax credit on their next BAS.
If you have any questions, feel free to contact Tax Ideas Accountants & Advisers. You can also book an appointment through our live calendar.