Edited version of your written advice

Authorisation Number: 1012733189607

Ruling

Subject: GST and sales of garages, with or without a villa

Question 1:

Are you required to be registered for goods and services tax (GST) in relation to your sales of the two separately titled garages?

Answer 1:

No.

Section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold. The registration turnover threshold for entities other than non-profit entities is $75,000.

In calculating your current and projected GST turnovers, the following supplies (amongst others) are excluded:

• supplies that are input taxed (which includes financial supplies, residential rent and sale of residential premises); and

• supplies that are not made in connection with an enterprise that you carry on.

In working out your projected GST turnover, you disregard any supply made or are likely to be made, by you by way of transfer of ownership of a capital asset of yours.

Accordingly, the sales of your garages (which were used for private purposes with your villa and never rented to another party) are excluded from the calculation of your GST turnover, and therefore you are not required to be registered for GST as a result of these sales.

Question 2:

Are your sales of one or both separately titled garages subject to GST?

Answer 2:

No.

Under section 9-5 of the GST Act, you make a taxable supply if:

(a) you make the supply for consideration; and

(b) the supply is made in the course or furtherance of an enterprise that you carry on; and

(c) the supply is connected with Australia; and

(d) you are registered or required to be registered.

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

Based on the information provided, your sales of the garages do not satisfy the requirements of a taxable supply under section 9-5 of the GST Act because:

(i) The garages were used for private purposes, and therefore the sales of the garages are not made in the course or furtherance of an enterprise (business) that you carry on; and

(ii) You are currently not registered for GST. The garages are private capital assets which are excluded from your projected GST turnover, and therefore you are also not required to be registered for GST as a result of your sales of these garages.

Accordingly, where you sell one or both garages separately from your sale of the villa, the separate supplies of the garages are not subject to GST.

Question 3:

Are your sales of one or both garages together with your villa subject to GST?

Answer 3:

No.

The GST treatment for your sale of the garage (or garages) together with the villa will be the same as your sale of the villa (which has been used for private purposes). The garage(s) is ancillary or incidental to the dominant component of the supply being the villa. You are making a composite supply of residential premises to be used predominantly for residential accommodation. This is still the outcome where the garage is separately titled, but is physically located within the same building complex.

Based on the information provided, your sales of one or both garages together with the villa do not satisfy the requirements of a taxable supply under section 9-5 of the GST Act because:

• The villa and garage(s) were used for private purposes, and therefore the sale of the villa with a garage (or garages) is not made in the course or furtherance of an enterprise (business) that you carry on; and

• You are currently not registered for GST. The villa and the garage(s) are private capital assets which are excluded from your projected GST turnover, and therefore you are also not required to be registered for GST as a result of these sales.

• The sale of the villa (together with a garage/s) would have been an input taxed supply (even if the other requirements of section 9-5 of the GST Act are satisfied).

Accordingly, where you sell the villa together with one or both garages, the supply is not subject to GST.

Relevant facts and circumstances

Mr and Mrs X (you) are spouses, who are not currently registered for GST as individuals or as a partnership.

You purchased a villa which was used as your home. The villa had no attached garage(s), and therefore you separately purchased two garages within the complex. The garages are separately titled and not attached to the villa.

The villa is owned by (in the names of) 'Mr and Mrs X' as joint tenants. The two garages are also jointly owned by both Mr and Mrs X.

The first garage was purchased for $A. The second garage was purchased several years later for $B. The villa was purchased prior to the two garages.

The garages were for your own private use and have never been rented to other parties.

You are considering selling your villa as well as selling the garages. The sale of the villa (and the optional sale of the garage(s)) is currently being advertised. The villa has been advertised as a property with several bedrooms which is fully self-contained (with the required living facilities).

The villa may be sold with one or both garages depending on the purchaser(s).

You have been advised that the garages may be sold for approximately $C each.

Due to personal reasons you have decided to move from the villa.

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 9-20

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

A New Tax System (Goods and Services Tax) Act 1999, Division 40

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