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Edited version of private ruling

Authorisation Number: 1011744723956

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Ruling

Subject: GST registration and sale of property

Question1

Is the Trustee for a Statutory Trust required to be registered for the goods and services tax (GST)?

Answer

Based on the information received, the Trustee for a Statutory Trust is not required to be registered for the GST.

Question 2

Will the Trustee for a Statutory Trust make a taxable supply when the property located in Australia (Property) is sold?

Answer

Based on the information received, the Trustee for a Statutory Trust will not make a taxable supply when the Property is sold.

Relevant facts

Pursuant to an order of the Supreme Court you have been appointed as statutory trustee (Trustee) for the purpose of selling a Property in Australia and the Property is vested in the Trustee. The proceeds of the sale, after deduction of expenses, is to be paid out to the applicants and respondent.

Prior to the Court Order, the Property was jointly owned by the applicants and respondent. The applicants and respondent are now beneficiaries of the Trust Estate under the Order.

The Trustee has been involved with the Property since the court appointment and has not carried on any business on the Property since the date of the court order.

The Trustee currently does not have a tax file number (TFN) and has not applied for an Australian business number (ABN) and GST registration.

Reasons for decision

Questions 1 and 2

Under section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you must pay the GST on any taxable supply that you make.

You make a taxable supply under section 9-5 of the GST Act if:

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

All the requirements in section 9-5 of the GST Act must be satisfied for a supply to be a taxable supply.

From the information received, paragraphs 9-5(a) and 9-5(c) of the GST Act will be satisfied when the Trustee sells the Property as:

The Trustee will be making a supply of property for consideration as under the Court Order the Trustee holds the legal title of the Property since the Property has been vested in the Trustee.

The sale of the Property will be connected with Australia as the property is situated in Australia.

The Trustee is not registered for GST. Therefore it is necessary to determine whether the sale will be in the course of an enterprise that the Trustee is carrying on and whether the Trustee will be required to be registered for GST.

Is the sale in the course or furtherance of your enterprise?

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

Our view on the meaning of the term 'enterprise' is explained in detail in Miscellaneous Taxation Ruling MT 2006/1 which is available at our website.

As per paragraph 159 of MT 2006/1, whether or not an activity constitutes an enterprise is a question of fact and degree depending on the circumstances of each individual case.

Paragraph 234 of MT 2006/1 distinguishes between activities done in the form of a business and those done in the form of an adventure or concern in the nature of trade. A business encompasses trade engaged in on a regular basis. An adventure or concern in the nature of trade includes an isolated transaction or one-off transaction that does not amount to a business but which has the characteristics of a business deal (that is the activities are done under a profit-making scheme).

From the information received, we do not consider that the activity of selling the Property by the Trustee will constitute an enterprise for GST purposes because:

The Trustee is not in the business of selling real property;

The sale is not in the form of an adventure or concern in the nature of trade because the Trustee is not selling the Property for profit. In supplying the Property as trustee for the sale, the Trustee is merely acting in accordance with the Court Order to dispose the property and distribute the proceeds (after deducting expenses) to the parties to a dispute.

Therefore, the sale of the Property will not be made in the course of an enterprise that the Trustee is carrying on. Accordingly, paragraph 9-5(b) of the GST Act will not be satisfied.

GST registration

Under section 23-5 of the GST Act you are required to be registered if:

As we consider that the Trustee will not be carrying on an enterprise when selling the Property, the Trustee will therefore not be required to register for GST since the requirements in section 23-5 of the GST Act will not be satisfied.

Accordingly, paragraph 9-5(d) of the GST Act will not be satisfied.

Summary

As all the conditions of section 9-5 of the GST Act will not be satisfied, the sale of the Property by the Trustee will not be a taxable supply. Therefore the Trustee will not have any GST liability on the sale of the Property.

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