ATO Interpretative Decision

ATO ID 2001/701 (Withdrawn)

Goods and Services Tax

GST and sale of property consisting of residential and other real property
FOI status: may be released

The ATO view for this issue is covered in Goods and Services Tax Ruling GSTR 2000/20.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 vendor, 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 property consisting of residential premises, a paddock and a stable?

Decision

No, the entity is not making an input taxed supply under section 40-65 of the GST Act when it sells property consisting of residential premises, a paddock and a stable.

To the extent that the supply is not GST-free as a supply of a going concern under subdivision 38-J of the GST Act, the entity is making a mixed supply that is partly a taxable supply under section 9-5 of the GST Act and partly an input taxed supply under section 40-65 of the GST Act.

Facts

The entity is a property vendor. The entity is selling the property which comprises residential premises, a paddock and a stable.

The residential property has previously been sold as residential premises and has been used for residential accommodation prior to 2 December 1998. The premises are capable of being occupied. There have been no improvements or renovations carried out on the property since it was purchased in 1991. The property is being sold in that condition.

The paddock and the stable are leased to a tenant who looks after the horses on the property.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

Reasons for Decision

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.

However, the sale is not input taxed to the extent that the residential premises are new residential premises other than those used for residential accommodation before 2 December 1998 (paragraph 40-65(2)(b) of the GST Act).

Section 195-1 of the GST Act defines residential premises to mean land or a building that:

•: is occupied as a residence; or
•: is intended to be occupied, and is capable of being occupied, as a residence; and includes a floating home.

From the facts, the supply of the residential premises satisfies section 40-65 of the GST Act and is therefore input taxed. However, it is necessary to determine whether the supply of the paddock and stable, when sold with the residential premises, is a supply of residential premises to be used predominantly for residential accommodation. The characteristics of residential premises are set out at paragraphs 24 to 27 of Goods and Services Tax Ruling GSTR 2000/20.

The stable is not used for personal accommodation. It does not provide sleeping accommodation and the basic facilities for daily living. Regarding the paddock, vacant land itself can never have sufficient physical characteristics to mark it out as being able to be or intended to be occupied as a residence.

Also, as supplies of residential premises are input taxed only to the extent that they are used predominantly for residential accommodation, if any other enterprise is carried on the land, then the definition of residential premises will not extend to that portion. Therefore, that part of the property relating to the leasing of the paddock and stable is not considered a supply of input taxed residential premises.

Accordingly, to the extent that the supply is not GST-free as a supply of a going concern under subdivision 38-J of the GST Act, the entity is making supply that is partly a taxable supply under section 9-5 of the GST Act and partly an input taxed supply under section 40-65 of the GST Act when it sells property consisting of residential premises, a stable and a paddock.

[Note: The value of a supply that is partly taxable and partly GST-free or input taxed is worked out on a proportional value basis using section 9-80 of the GST Act.]

Date of decision: 28 August 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 9-80
   section 40-65
   subsection 40-65(1)
   paragraph 40-65(2)(b)
   Subdivision 38-J
   section 195-1

Related Public Rulings (including Determinations)
GSTR 2000/20

Keywords
Goods & services tax
GST property & construction
GST residential premises
GST sale of real property
Taxable supply

Business Line: GST

Date of publication: 30 November 2001

ISSN: 1445-2782

history

	Date:	Version:
	28 August 2001	Original statement
You are here	9 December 2005	Archived

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