I like to think anything is possible with enough planning and research and that is one thing I strongly recommend if you are thinking about building a shed to live in..
Even if it is just a temporary dwelling, there a conditions imposed by local shires. So I would suggest calling your local Shire or a private certifier and have a chat with them about your plans.
Most Shires have details about their policy in regards to this on their website. Here are some of the things you will need to take into consideration:
Does the land have a dwelling entitlement already? Or will you be able to secure one?
A shed or garage is a class 10a building (not for habitation). In order to live in it, it has to be a Class 1.
The land would have to have a proper approved septic / waste disposal system or be connected to sewerage.
The proposed building would have to meet Basix standards. (Basix is a sustainable planning measure which aims to make all residential dwellings energy and water efficient. A Basix assessment considers water use, Energy Consumption and Thermal Comfort.)
The slab will have to have a vapour barrier to prevent rising damp and it may also be required to have termite prevention.
So what is my conclusion?
Yes! It is possible to live legitimately in a building that resembles a shed but it would have to have Class 1 engineering so technically it is not a shed. There are some really weird and wonderful shed homes out there! Just make sure you do your homework before you sign up and pay your deposit!