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Edited version of your written advice
Authorisation Number: 1012824731691
Date of advice: 17 June 2015
Ruling
Subject: GST and transfer of property
Question 1
Will you make any supplies to Entity B under the terms of the Proposed Transfer Deed for the purposes of the GST Act?
Answer
No
Question 2
If the answer to question 1 is 'yes", will Entity B provide any consideration to you under the terms of the Proposed Transfer Deed in connection with any of those supplies for the purposes of the GST Act?
Answer
Not necessary to answer.
Relevant facts and circumstances
You are registered for GST.
You were established in yyyy from the merging of several organisations.
You are endorsed as an income tax exempt entity in the form of a charitable institution and as a deductible gift recipient in the form of a public benevolent institution.
From yyyy to yyyy, Entity B, you and your predecessors have entered into a number of joint venture agreements (JVAs) in relation to the provision of affordable housing. Under the JVAs, the organisations had an interest in the properties they managed.
When the organisations merged, these interests in the properties were transferred to you.
On ddmmyyyy, you and Entity B entered into an agreement which established the terms on which you were to discharge its functions as a Community Housing Organisation (CHO). The agreement imposed particular obligations on you and the Parties generally.
Later, you and Entity B entered into another agreement.
The agreement sets out the terms and conditions on which you are to discharge your functions as a CHO and the manner in which community housing stock is to be managed and maintained by you.
The agreement also establishes:
• Services delivery standards across the Community Housing sector and a means by which Entity B can regulate the CHO
• A means by which Entity B's interests in the Land and Premises can be protected.
The agreement replaces any service level agreement or similar between the Parties that relates to the Land and/or Premises.
The agreement overrides any service level agreement or similar between the Parties that relates to the Land and/or Premises, but does not extinguish any provision in those agreements that establishes:
• The Parties' interests in Land and/or Premises the subject of those agreements and the calculations of those interests, and
• The applicable terms of those agreements
Under the agreement, a number of requirements are specified to be performed by you.
In the event that you default on your obligations, Entity B has remedies available, including the transfer of ownership, possession and management responsibilities of the relevant Land and Premises to another CHO or to Entity B.
It is now proposed that you and Entity B will enter into a Proposed Transfer Deed whereby Entity B will transfer its interest in the Land and Premises to you. You will not be required to make any contribution or pay any amount (whether monetary or otherwise) to Entity B in consideration for this transfer.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-10,
Reasons for decision
In this reasoning, unless otherwise stated,
• all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
• all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act
Question 1
Under section 9-10, a supply is any form of supply whatsoever, and includes:
• a supply of goods
• a supply of services
• a provision of advice or information
• a grant, assignment or surrender of real property
• a creation, grant, transfer, assignment or surrender of any right
• a financial supply
• an entry into, or release from, an obligation
(i) to do anything; or
(ii) to refrain from an act; or
(iii) to tolerate an act or situation;
Although the term supply is defined widely in section 9-10, this does not mean that every action, undertaking or contractual term entered into by an entity will constitute a supply under section 9-10.
Through the Proposed Transfer Deed, Entity B will transfer its interests in the Land and Premises to you (Transfer Supplies).
The Proposed Transfer Deed will contain a clause to the effect that the terms of the agreement will continue to apply to the Land and Premises after Entity B's interest in these properties has been transferred to you pursuant to the terms of the Proposed Transfer Deed.
Prior to entering into the Proposed Transfer Deed, you have undertaken to meet various requirements as set out in the agreement. The Proposed Transfer Deed restates that those requirements still apply. However, the Proposed Transfer Deed does not impose on you any obligation that is not already contained in the agreement.
Therefore, in entering into the Proposed Transfer Deed, you will not supply anything that has any economic value or independent identity. Consequently, you will not make a supply.
Question 2
Not necessary to answer.
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