ATO Interpretative Decision
ATO ID 2004/694 (Withdrawn)
Goods and Services Tax
GST and sale of land by Body Corporate in New South WalesFOI status: may be released
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The issue in ATO ID 2004/694 has misinterpreted the Strata Schemes Management Act 1996 (NSW).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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 body corporate in New South Wales, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells common property that has the entity's name on the title deed?
Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act when it sells common property that has the entity's name on the title deed.
The entity is acting as an agent for the owners of the property and as such, it is the owners making the supply of the common property.
Facts
The entity is an owners' corporation for a strata plan registered in New South Wales, referred to as a body corporate.
The entity sells a block of common property. The entity's name is on the title deed of the common property. The property is located in New South Wales.
Reasons for Decision
Section 9-5 of the GST Act sets out the requirements that must be met for an entity to make a taxable supply. However, before applying the requirements of section 9-5 of the GST Act it is necessary to determine who is making the supply of the common property.
Ownership of common property of a strata plan varies under different State Acts and Territorial Ordinances. Section 20 of the Strata Schemes (Freehold Development) Act 1973 (NSW) provides that the estate or interest of a body corporate in common property vested in it or acquired by it shall be held by the body corporate as agent for the lot proprietors as tenants in common in proportions equal to their lot entitlements. The entity's name is on the title deed and as such, legal title is vested in the entity, but only in its capacity as an agent for the owners.
Paragraph 15 of Goods and Services Tax Ruling GSTR 2000/37 provides that when an agent uses their or its authority to act for a principal, then any act done on behalf of that principal is an act of the principal. The entity, as an agent, sells the common property of the owners. The entity is acting on behalf of the owners of the property and therefore, it is the owners of the common property who make the supply.
As the entity did not make the supply of the property, the entity is not making a taxable supply under section 9-5 of the GST Act.
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
section 20
Related Public Rulings (including Determinations)
GSTR 2000/37
Keywords
Goods and services tax
GST property & construction
GST sale of real property
ISSN: 1445-2782
| Date: | Version: | |
| 24 May 2004 | Original statement | |
| You are here | 20 April 2012 | Archived |
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