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Authorisation Number: 1051245650405
Date of advice: 7 July 2017
Subject: GST and the transfer of property
Are you liable for goods and service tax (GST) on the transfer of the Land to Entity B?
GST is payable on a taxable supply.
The requirements of a taxable supply are outlined in section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and include that 'the supply is made in the course or furtherance of an enterprise that you carry on'.
You are carrying on a commercial leasing enterprise. The transfer of the Land to Entity B did not have the necessary connection to your enterprise as the Land did not form part of the assets of the enterprise and was not applied in the enterprise.
Therefore, your supply of the Land is not a taxable supply and no GST is payable by you.
Relevant facts and circumstances
The Trustee for the Trust (you) are registered for GST.
Your main business is commercial leasing of property.
You own industrial factories/warehouse properties which are leased.
On ddmmyyyy you purchased a residential block of land (the Land) on behalf of a beneficiary of the trust, Entity B who was unable to get a loan from the bank to buy the Land. The intention was for the Land to remain in trust until Entity B was able to secure a loan to build a home.
Entity B is not registered for GST.
You transferred the Land to Entity B. The process began on ddmmyyyy and was completed by ddmmyyyy.
The Land was not purchased with intent to sell or make a profit and no profit was made on the Land at any time.
No exchange of money occurred between you and Entity B.
You did not claim a GST credit for the purchase of the Land or any expenses incurred while holding the Land. You have not claimed any expenses incurred while holding the Land in your tax return.
You have not claimed a GST credit for any costs in relation to the transfer of the Land to Entity B. You have not claimed any expenses in relation to the transfer in your tax return.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
A New Tax System (Goods and Services Tax) Act 1999 Division 72, and
Income Tax Assessment Act 1936 Section 318.