Subdividing excess land for family

Hi there,

I have a large acreage property here on the sunshine coast that I would like to subdivide for members of my family but was alarmed to hear that GST and income tax could apply at market rates.... I've spoken with the council and a town planner who say it's really just a very simple subdivision to allow me to give a small 2 acre parcel of land to my sister and then I'd also be able to get rid of a large part of it that I don't have use for, the maintenance is also getting to be too much after a recent back injury.... I've never done any kind of development so any help would be greatly appreciated....

 

You will be subject to the same rules and charges as everyone else. The fact that you plan to give the land to your sister is not relevant. You may also be up for CGT.
Marg

 

Yep no main residence exemption because no residence on that land.

 

Nothing stopping you subdividing it and leasing it to her for 50 years for $1. On death you can leave her the title.

 

Dean,
What you have heard could right if the ATO decide that you bought the property to profit from its subdivision and sale. Unfortunately, the onus of proof rests with you so I would recommend you ask the ATO for a ruling it would be worth quoting private ruling number 1012730145598. If it is considered you are merely realising an asset then CGT would apply rather than normal income tax which means after 12 months from buying the original property you will get the 50% discount. Further if it is the sale of a capital asset then it is not included in your turnover to decide whether you should be registered for GST. If you aren't required to register for GST then you do no have to charge it even though you are making the supply of something that is subject to GST. Reference GST act 185-25 and 23-5

 

Thanks Terry, I only bought the property because it had an existing home that I fell in love with.... the plan is to keep the home on 3 acres, give 2 acres to my sister and then sell off the rest.....

 

Sounds like definite CGT territory.
Marg

 

Hi Dean,
What size land are you talking. Is it zoned as primary production? If it is you may be able to pass the land on to children (but probably not sibling) without CG tax or stamp duty, but I think to subdivide and sell off a small portion I would think usual rules would apply.

 

Hi Allgood, the land size is 15 acres, it's rural residential. Just bought it for the home because there was very little choice to compare it to and ticked all of my boxes.... being able to help out my sister is what I'd like to be able to do without making it any more complicated than it needs to be..... prefer to err on the side of caution generally so am going to look into Julia's suggestion and asking the ATO for a ruling. just wondering if anyone else had a similar set of circumstances......