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Edited version of private ruling

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Ruling

Subject:

GST and sale of land by a statutory trustee.

Question 1:

Is a person, acting in the capacity of a statutory trustee, an entity for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

No, a person acting in the capacity of a statutory trustee is not an entity for the purposes of the GST Act. The entity involved in the sale of the land is the trust for which the person is statutory trustee.

Question 2

Is a person acting in the capacity of a statutory trustee, making a taxable supply when they sell a block of land and therefore required to be registered for goods and services tax (GST)?

Answer 2

No, the person acting in the capacity of a statutory trustee, is not making a taxable supply, when the relevant block of land is sold. Therefore, the person is not required to be registered for GST.

Relevant facts and circumstances

A vacant block of land was owned by two persons.

They applied to the Court to appoint a statutory trustee.

The role of the statutory trustee was to arrange for the sale of the property.

A statutory trustee was appointed by the Courts.

The property is a vacant block which had been subdivided

The subdivision occurred prior to the appointment of the statutory trustee.

The title to the property has been transferred to the statutory trustee.

Since their appointment, the statutory trustee has organised for the sale of the property and has subsequently entered into a contract for the sale.

The statutory trustee is not arranging for any development of the land, such as gas, power, water connections, or access roads.

The contract price for the sale of the land exceeds the registration turnover threshold.

Reasons for decision

Question 1

The term 'entity' is defined in section 184-1 of the GST Act as follows:

A trust is given statutory status as an entity under subsection 184-1(1) of the GST Act. A trust is not a legal person and therefore, must be represented by the trustee for the trust. Accordingly, there will only be one Australian Business Number (ABN) registration and that will be in the name of the trust.

The question of whether an entity is carrying on an enterprise is examined in Miscellaneous Tax Ruling MT 2006/1(MT 2006/1). This Ruling provides assistance to entities in determining their entitlement to an ABN. This Ruling considers the meaning of certain key words and phrases used to define:

In regard to a trust, paragraph 68 of MT 2006/1 states:

Paragraphs 72 and 73 of MT 2006/1 state:

In conclusion, the trust for which the statutory trustee acting is an entity for GST purposes, but not the trustee.

Question 2

The term 'taxable supply' is defined in section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) as follows:

In this case, sale of the property is for consideration and the supply is connected with Australia. As such, paragraphs (a) and (c) of section 9-5 of the GST Act are satisfied. We need to consider whether the supply is able to satisfy the remaining paragraphs of section 9-5 of the GST Act.

The activities carried out by the statutory trustee must be examined to see if they can be regarded as the carrying on of an enterprise.

Section 9-20 of the GST Act provides that, amongst other things, an enterprise is an activity or a series of activities done:

Paragraph 234 of MT 2006/1 states, an adventure or concern in the nature of trade may be an isolated transaction that does not amount to a business, but which has the characteristics of a business deal.

Further, at paragraphs 262 and 263 MT 2006/1 states:

Paragraph 265 of MT 2006/1 lists a number of factors which can be used to determine whether activities in relation to a sale of property are done under a profit-making undertaking or scheme.

These factors are as follows:

In determining whether activities relating to isolated transactions are an enterprise or are the mere realisation of a capital asset, it is necessary to examine the facts and circumstances of each particular case. This may require a consideration of the factors outlined above. However, there may also be other relevant factors that need to be weighed up as part of the process of reaching an overall conclusion. No single factor will be determinative. Rather, it will be a combination of factors that will lead to a conclusion as to the character of the activities.

Paragraph 270 of MT 2006/1 states:

In applying the above factors to your case we find that:

Generally, the sale of a private asset is not, in the absence of other factors an adventure or concern in the nature of trade.

Having considered the above factors, it is our view that the statutory trustee is not carrying on an enterprise when he sells the block of land. He was appointed to arrange for the sale of the property and the title has merely been transferred to him to enable him to carry out this task.

Further, under section 23-5 of the GST Act an entity is required to be registered for GST, if:

As the statutory trustee is not carrying on an enterprise, he is not required to be registered.

For an entity to have made a taxable supply, all of the requirements of section 9-5 of the GST Act must be met. The statutory trustee does not satisfy paragraph 9-5(b) and is therefore not making a taxable supply when he sells the block of land.


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