ATO determines that developer of 22 lot subdivision does not
have to register for GST
Cooper Grace Ward has recently received a favourable private
ruling from the ATO in relation to a substantial land
The client owns 52 acres of residential land and intends to
subdivide the property into 22 allotments.
The ATO ruled that:
the project did not constitute an enterprise; and
the client will not have to pay GST on the sale proceeds.
In making its decision, the ATO was clearly influenced by
Miscellaneous Taxation Ruling MT2006/1 and cases such as Statham
and Anor v Federal Commissioner of Taxation and Casimaty v Federal
Commissioner of Taxation in relation to whether the taxpayer's
activities amounted to the carrying on of a profit making
undertaking or was only the mere realisation of a capital
In deciding that the subdivision of the property was the mere
realisation of a capital asset, the ATO considered it was relevant
the subdivision was an isolated transaction;
there was no business organisation involved;
any interest incurred on funds borrowed to finance the
subdivision was not claimed as a business expense;
the level of development was limited to access roads and
infrastructure required to obtain planning approval; and
the property was owned for 30 years prior to the decision to
While other taxpayers cannot necessarily rely on this ruling, it
does indicate that clients who undertake significant subdivision
projects that involve a "mere realisation" may not be
required to pay GST on sale proceeds.
Cooper Grace Ward was named Joint Best Australian Law Firm in
the BRW Client Choice Awards 2009 - Revenue < $50m.
The firm has also been named as the fastest growing law firm in
Australia for 2009 by The Australian.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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