GST on sale of subdivided inherited farmland

Hi

I was wondering if anyone could supply some background info prior to discussing this with my accountant.

Three years ago I inherited some farmland. This farmland has been since leased to a farmer. In chosen to sell this land, and in order to realise the most from it have gained approval to subdivide into rural residential lots. Improvements to the property would be minimal-basically some fencing and the provision of electricity.

I am registered for GST as I carry out a separate business.

Do I need to charge GST in the dale price?

Graeme
 
You have entered into a very complex tax issue that needs expert advice based on your particular circumstances. One issue that will need to be considered is whether this is merely the realisation of an asset or is it a profit making scheme or undertaking. If the only thing that needs to be done is fencing and electricity it might be closer to realising an asset. If it is realising an asset then GST might not apply. The number of lots you are subdividing into might be an indication too.

Are you selling along existing portion or lot boundaries or do you need to have a plan of subdivision registered?

Other issues to consider are what is your cost base of the land, if the land has become 'trading stock' when did this occur and what are the tax implications.
 
Thanks for that.

I've had development approval for a subdivision. I'm not sure what you mean by the land becoming trading stock. It is still being used as farmland, and will be so until re-fenced and ready for sale.

Graeme
 
That's why you need to get advice from a competent professional as the issue may be that the decision to subdivide has turned the property into trading stock at that time. If that were the case then from memory you would pay capital gains tax on the difference between your cost base and the value at the time it became trading stock and this should be done for the tax year when the land became trading stock and then any orofit above that value would be taxed as income.
 
Thanks

I will certainly getting advice from a competent professional, and maybe even organising a ruling from the ATO.

Yes I will be up for Capital Gains Tax on the increase over cost base. The uncertainty is GST, which I hope can be avoided.

Graeme
 
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