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Edited version of private advice
Authorisation Number: 1012638219042
Ruling
Subject: GST and sale of property
Question
Will the GST apply to the sale of the property located in Australia by the Australian company?
Advice
No, GST will not apply to the sale of the property located in Australia by the Australian company because based on the information received the sale of the property will not be a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
GST is payable on a taxable supply. One of the requirements for a taxable supply is that the supplier is registered or required to be registered for GST.
Section 188-25 of the GST Act excludes certain supplies made when working out the projected GST turnover for GST registration. Section 188-25 of the GST Act requires you to disregard the following when calculating your projected GST turnover:
a) any supply made, or likely to be made, by you by way of transfer of ownership of a capital asset of yours; and
b) any supply made, or likely to be made, by you solely as a consequence of:
I. ceasing to carry on an enterprise; or
II. substantially and permanently reducing the size or scale of an enterprise.
From the facts given, the property is a capital asset from which rental income is derived from and the ownership of the asset will be transferred when sold. When considering the projected GST turnover for GST registration, the consideration receive from the sale of the property will not be included under section 188-25 of the GST Act. In this instance the Australian company will not be required to be registered for GST when selling the property as currently they are not registered for GST.
Relevant facts and circumstances
You are an Australian company and own some properties in Australia. Currently you are leasing the properties. You are not registered for GST because your GST annual turnover from the leasing enterprise is below the GST registration threshold of $75,000.
You are considering selling one of the properties. The property will be sold as vacant land and you estimate the sale price of the vacant land to be above $75,000.
Relevant legislative provisions
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 188-25
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