The AAT recently held that the sale of land by a taxpayer was subject to GST, as it was a supply made in the course of an enterprise being carried on by the taxpayer. The taxpayer purchased a single parcel of land in 2013 for $1.6 million, and he subsequently took steps for the land to be subdivided and rezoned.  He then sold the land in 2021 for $4.25 million before the subdivision was completed.  The ATO advised the taxpayer that the sale of the land was subject to GST as a taxable supply under the GST Act.

Taxpayer objections

The taxpayer objected to the GST assessment on the following grounds:

• the sale of the property was not made by him in the course of his enterprise; and
• as the property was the taxpayer's residential premises, it was an input taxed supply, so no GST should apply anyway.

AAT decision

However, the AAT agreed with the ATO that the sale of the property was subject to GST as a supply made in the course of the taxpayer's enterprise. The AAT first noted that the sale of the property was not an input taxed supply of residential premises because the buildings on the property were uninhabitable, and so the property did not meet the definition of 'residential premises' in the GST Act.

Development in the form of a business

The AAT also held that the taxpayer's development works were in "the form of a business", even if he was not in the business of being a property developer.  Relevant factors included the scale of the operations that the taxpayer was involved in (including rezoning and subdividing the property), as well as the amount of capital invested by him in the purchase of the property and development works.  The taxpayer's "series of activities" throughout his ownership of the property therefore amounted to the carrying on of an enterprise, and the taxpayer was liable to pay GST on the sale of the property.

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