ATO Interpretative Decision

ATO ID 2001/789 (Withdrawn)

Goods and Services Tax

• ATO view on this issue is covered in Goods and Services Tax Determination GSTD 2000/9 and Goods and Services Tax Ruling GSTR 2001/7.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a profit-making body, required to be registered for goods and services tax (GST) under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it rents out residential and commercial premises and the value of the supply of residential premises for any 12 month period would exceed $50,000, if the value of the supply of commercial premises in the same period would be less than $50,000?

Decision

No, the entity is not required to be registered for GST under section 23-5 of the GST Act when it rents out residential and commercial premises and the value of the supply of residential premises for any 12 month period would exceed $50,000, if the value of the supply of commercial premises in the same period would be less than $50,000.

Facts

The entity is a profit-making body. The entity is carrying on an enterprise of renting out residential and commercial premises. The entity does not make any other supplies in the course of its enterprise.

The residential premises are rented out as private homes. The commercial premises are rented out as offices.

During any 12 month period, the entity would receive $60,000 in residential rent and $30,000 in commercial rent.

The entity is not registered for GST.

Reasons for Decision

Section 23-5 of the GST Act provides that an entity is required to be registered for GST if:

•

it is carrying on an enterprise; and

•

its annual turnover meets the registration turnover threshold.

The entity is carrying on an enterprise of renting out residential and commercial premises. Therefore, the entity will be required to be registered for GST if its annual turnover meets the registration turnover threshold.

Under section 23-15 of the GST Act, an entity's registration turnover threshold is $50,000, unless it is a non-profit body. As the entity is a profit-making body, its registration turnover threshold is $50,000.

Subsection 188-10(1) of the GST Act provides that an entity's annual turnover meets a particular turnover threshold if:

•

its current annual turnover is at or above the turnover threshold and the Commissioner is not satisfied that its projected annual turnover is below the turnover threshold; or

•

its projected annual turnover is at or above the turnover threshold.

'Turnover threshold' is defined in section 195-1 of the GST Act to include the registration turnover threshold.

At any particular time, an entity's current annual turnover is the sum of the values of all the supplies that the entity has made, or is likely to make, during the current month and the preceding 11 months (subsection 188-15(1) of the GST Act). An entity's projected annual turnover, at any particular time, is the sum of the values of all the supplies that the entity has made, or is likely to make, during the current month and the next 11 months (subsection 188-20(1) of the GST Act).

However, supplies that are input taxed are excluded from the calculation of current and projected annual turnover.

Under section 40-35 of the GST Act, a supply of premises that is by way of lease is input taxed, if the supply is of residential premises (other than commercial residential premises) and the premises are to be used predominantly for residential accommodation.

In this case, part of the entity's enterprise includes renting out residential premises as private homes. The supply of the residential premises is input taxed under section 40-35 of the GST Act. As such, the residential rent received for the supply of these premises is excluded from the calculation of the entity's current and projected annual turnover under sections 188-15(1) and 188-20(1) of the GST Act.

The remainder of the entity's enterprise involves renting out commercial premises as offices. The supply of the commercial premises is not input taxed under section 40-35 of the GST Act. As such, the commercial rent received for the supply of these premises is included in the calculation of the entity's current and projected annual turnover under subsections 188-15(1) and 188-20(1) of the GST Act.

The supplies of the residential and commercial premises are the only supplies that the entity makes in the course of its enterprise. For any 12 month period, the value of the supply of residential premises would be $60,000, and the value of the supply of commercial premises, $30,000. The supply of the residential premises is excluded from the calculation of the entity's current and projected annual turnover. Therefore, the entity's current annual turnover, at any particular time, is $30,000. Its projected annual turnover, at any particular time, is also $30,000.

Neither the entity's current annual turnover nor projected annual turnover is at or above the registration turnover threshold of $50,000. Therefore, under subsection 188-10(1) of the GST Act, the entity's annual turnover does not meet the registration turnover threshold. As such, the entity is not required to be registered for GST under section 23-5 of the GST Act when it rents out residential and commercial premises and the value of the supply of residential premises for any 12 month period would exceed $50,000, if the value of the supply of commercial premises in the same period would be less than $50,000.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 23-5
   subsection 23-10(1)
   section 23-15
   section 40-35
   subsection 188-10(1)
   subsection 188-15(1)
   subsection 188-20(1)
   section 195-1

Keywords
Goods & services tax
GST property & construction
GST residential rents
GST registration
GST annual turnover
GST turnover threshold
Required to be registered
Input taxed supplies

Business Line:  GST

Date of publication:  21 December 2001

ISSN: 1445-2782