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GST Q&A – GST and land transfers


Where there is a transfer of land between a council (or other local government entity) and a state government department for no consideration, or a peppercorn rate of $1.00, is there GST on the transaction? If so, is GST applied on the basis of the agreed amount or on the market value of the land?


GST will only be applied on this transaction if it constitutes a taxable supply. Under section 9-5 of the GST Act, a supply made by an entity will be a taxable supply where:

  • the supply is made for consideration;
  • the supply is made in the course or furtherance of an enterprise the entity carries on;
  • the supply is connected with Australia; and
  • the entity is registered or required to be registered.

Additionally, the supply cannot be an input-taxed or GST-free supply.

Assuming all the other requirements are satisfied, the key issue in this situation is whether the supply of land is made for consideration.

This then raises a query regarding whether the transaction involves any in-kind consideration (i.e. more than just the peppercorn amount for the transfer). For example, has the supplier agreed to transfer the land in exchange for something else (services, reduction in fees etc.) in addition the peppercorn amount?

If so, then the market value of that ‘something else’ will count as consideration, with GST then being applied to the transaction. We suggest you investigate this aspect to confirm that there is not any in-kind consideration.

If not, and the transfer amount is legitimately $Nil or a peppercorn amount, then generally either GST will not apply (on the basis that there is no consideration) or it will be limited to one-eleventh of the peppercorn amount of $1.00. However, this is subject to whether the entities are associates and the acquirer of the land will use it other than wholly for creditable purposes (i.e. it would not be entitled to 100% input credit if GST was applied to market value of land).

If the entities are associates and the input tax credit cannot be fully claimed, then Division 72 of the GST Act will deem the value (for purposes of application of the GST Act) of the taxable supply to be equal to the GST-exclusive market value of the land. As a result, GST would be 10% of that value.

We have assumed that the use by the recipient entity in your transaction would be wholly creditable. Accordingly, even if the council and the state government department were considered associates, there would be no deemed consideration under Division 72 and no GST would be applied to the transaction.

We note that we have not specifically considered the ‘associate’ question and will not unless you indicate the recipient would not get a 100% credit.


This article provides a general summary of the subject covered and cannot be relied upon in relation to any specific instance. It is not intended to be, nor should it be relied upon as, a substitute for professional advice. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use.