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Edited version of your written advice
Authorisation Number: 1012765895598
Ruling
Subject: Goods and services tax (GST) and sale of property
Question
Will the sale of the property situated in Australia (the property) be subject to GST?
Answer
No.
Under section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), GST is payable on taxable supplies.
Under section 9-5 of the GST Act, one of the requirements for making a taxable supply is that you are registered or required to be registered for GST.
Section 23-5 of the 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 (of $75,000 for an entity other than a non-profit). In working out your projected GST turnover, paragraph 188-25(a) of the GST Act requires you to disregard any supply made, or likely to be made, by you by way of transfer of ownership of a capital asset of yours.
Based on the information provided, the sale of the property will be excluded from the calculation of your GST turnover because it will be a transfer of a capital asset.
Therefore, as you are not registered and are not required to be registered for GST, the sale of the property will not be a taxable supply under section 9-5 of the GST Act and will not be subject to GST.
Relevant facts and circumstances
Mr X and Mrs X (you) purchased the property.
You have carried on farming activities on the property.
You built a house and a shed on the property.
The property has a land area of several acres.
You were registered for GST in relation to the farming enterprise you were carrying on.
You have never met the GST registration turnover threshold and cancelled your GST registration and ABN.
You are in the process of discussing sale of the property with developers who may undertake residential housing development on the property however, you will not be involved in any development.
You currently reside on the property and carry on a hobby farming enterprise.
You are not registered for GST as individuals.
You do not carry on any other enterprise as individuals or as a partnership.
Relevant legislative provisions
All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999:
• Section 7-1
• Section 9-5
• Section 23-5
• Section 188-25.
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