ATO Interpretative Decision
ATO ID 2001/507 (Withdrawn)
Goods and Services Tax
GST and the sale of residential propertyFOI status: may be released
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Refer to GSTR 2003/3 and the Property and Construction Industry Partnership - Issues Register - Section 11.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a property seller, making an input taxed supply under section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells a residential property?
Decision
Yes, the entity is making an input taxed supply under section 40-65 of the GST Act when it sells a residential property.
Facts
The entity is a property seller. The entity is selling residential property. This residential property is comprised of a house and land block. The residential property is capable of being occupied. The residential property has previously been sold as residential premises and was used for residential accommodation prior to 2 December 1998. The entity is selling this residential property in the course or furtherance of its enterprise.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Section 40-65 of the GST Act provides that a sale of residential premises may be input taxed.
Under subsection 40-65(1) of the GST Act, a sale of real property is input taxed but only to the extent that the property is residential premises to be used predominantly for residential accommodation.
Real property is defined under section 195-1 of the GST Act to include any interest in or right over land. The sale of the residential property is the sale of real property.
Residential premises are defined under section 195-1 of the GST Act to mean land or a building that is occupied or is intended to be occupied as a residence and which is capable of being occupied as a residence. In this case, the residential property is capable of being occupied and is therefore, a residential premise.
Under paragraph 40-65(2)(b) of the GST Act, the sale of residential premises is not input taxed if the residential premises are new residential premises, other than those used for residential accommodation before 2 December 1998.
Under paragraph 40-75(1)(a) of the GST Act, new residential premises are defined to include residential premises that have not previously been sold as residential premises and have not previously been the subject of a long-term lease.
The premises have previously been sold as residential premises and the premises were used for residential accommodation prior to 2 December 1998. Therefore, the residential premises are not new residential premises and as such, the sale of the residential property is an input taxed supply under section 40-65 of the GST Act.
Date of decision: 24 August 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
section 40-65
subsection 40-65(1)
paragraph 40-65(2)(b)
paragraph 40-75(1)(a)
section 195-1
Keywords
Goods and services tax
GST property & construction
GST new residential premises
GST residential premises
Input taxed supplies
ISSN: 1445-2782
| Date: | Version: | |
| 24 August 2001 | Original statement | |
| You are here | 17 June 2003 | Archived |