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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012482870711

Ruling

Subject: Supply of renovated residential premises

Question

Are you 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)?

Answer

No; you are not required to be registered for GST.

Relevant facts and circumstances

You are not registered for GST.

You acquired a freehold title to an estate on X as an input taxed supply from an unrelated party.

The estate consists of residential premises

During your period of ownership, you have renovated the premises.

You have provided a detailed list of all renovations carried out.

The renovations include:

One non load-bearing wall has been added to provide a partition for a new en-suite for the main bedroom.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 7-1

A New Tax System (Goods and Services Tax) Act 1999 Division 9

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

A New Tax System (Goods and Services Tax) Act 1999 section 40-65

A New Tax System (Goods and Services Tax) Act 1999 section 40-70

A New Tax System (Goods and Services Tax) Act 1999 section 40-75

A New Tax System (Goods and Services Tax) Act 1999 Division 188

A New Tax System (Goods and Services Tax) Act 1999 section 188-10

A New Tax System (Goods and Services Tax) Act 1999 section 188-15

A New Tax System (Goods and Services Tax) Act 1999 section 188-20

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

A New Tax System (Goods and Services Tax) Regulations 1999 Regulation 23-15.01

Reasons for decision

Required to be registered

You are required to be registered for GST under section 23-5 of the GST Act if your GST turnover meets the registration turnover threshold.

Regulation 23-15.01 of A New Tax System (Goods and Services Tax) Regulations 1999 specifies that the registration turnover threshold for entities such as you is the amount of $75 000.

Division 188 of the GST Act applies to determine whether your GST turnover meets the registration turnover threshold.

Your GST turnover will meet the registration turnover threshold if your current GST turnover and/or your projected GST turnover meet or exceed the registration turnover threshold (section 188-10 of the GST Act). In working out your current GST turnover (section 188-15 of the GST Act) or projected GST turnover (section 188-20 of the GST Act) you do not include supplies that are input taxed.

If your supply of the renovated residential premises is an input taxed supply, you will not be required to be registered.

The basic rules

Section 7-1 of the GST Act states that GST is payable on *taxable supplies

Division 9 of the GST Act defines taxable supplies, states who is liable for the GST, and describes how to work out the GST on supplies.

Taxable Supply

Section 9-5 of the GST Act states:

Sale of residential premises

Under section 40-65 of the GST Act a sale of real property is input taxed to the extent the property is residential premises to be used predominantly for residential accommodation. However, the sale is not input taxed to the extent the premises are 'new residential premises' (other than those used for residential accommodation before 2 December 1998).

Section 40-75 of the GST Act relevantly defines 'new residential premises' as residential premises that have been created through substantial renovations of a building.

A substantial renovation is defined under section 195-1 of the GST Act as:

The goods and services tax ruling that deals with the circumstances in which residential premises are new residential premises is GSTR 2003/3 Goods and services tax: when is a sale of real property a sale of new residential premises?

Paragraphs 60 to 62 of GSTR 2003/3 states:

While the renovations you have carried out have affected the building as a whole, you have not removed or replaced substantially all of the building. Your renovation of repairing and repainting walls and replacing fixtures does not constitute a substantial renovation. The premises are not 'new residential premises' as defined.

Conclusion

Your supply of the renovated premises will be an input taxed supply under section 40-65 of the GST Act. The supply is not a taxable supply and you are not required to be registered for GST.


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