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Edited version of your written advice
Authorisation Number: 1013116266493
Date of advice: 21 November 2016
Ruling
Subject: GST and statutory trustee's obligations
Question 1
Are the Trustees required to be registered for GST under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No, the Trustees are not required to be registered for GST because they are not carrying on an enterprise.
Section 23-5 of the GST Act states that you are required to be registered if you are carrying on an enterprise, and your GST turnover meets the registration turnover threshold.
Section 9-20 of the GST Act defines an enterprise as, among other things, an activity or series of activities done in the form of a business or in the form of an adventure or concern in the nature of trade.
From the information received, we do not consider that the activity of selling the Properties by the Trustees constitutes an enterprise for GST purposes because:
● The Trustees are not property developers nor are they in the business of buying and selling of property.
● In supplying the Properties as trustees for sale, the Trustees are merely acting in accordance with the Court Order to dispose the property and distribute the proceeds to the parties to a dispute. Accordingly, the sale is not in the form of an adventure or concern in the nature of trade because the Trustees are not selling the Properties for profit.
Since the Trustees are not carrying on an enterprise, section 23-5 of the GST Act is not completely satisfied and it is unnecessary to consider the registration turnover threshold. The Trustees are not required to be registered for GST.
Note however, in this case the Trustees are making the supply on behalf of the Partnership, and the Partnership is the entity making the supply of the Properties. Accordingly, the Partnership's ABN (34 207 899 108) should be quoted when invoicing for the sale of the Properties, and the sale should be reported on the Partnership's business activity statement (BAS) under a new CAC account (Client Activity Centre) in the ATO's systems.
Question 2
Did the Trustees make a creditable acquisition under section 11-5 of the GST Act, from the Partnership when the Properties vested in accordance with the Order?
Answer
No, the Trustees do not completely satisfy section 11-5, which requires them to be registered for GST, among other things, when making a creditable acquisition. Since the Trustees are not registered nor required to be registered for GST, the Trustees did not make a creditable acquisition from the Partnership when the properties vested in accordance with the Order. It is unnecessary to consider other elements of section 11-5.
Question 3
Are the Trustees making a taxable supply under section 9-5 of the GST Act in relation to the sale of the Properties?
Answer
No, the Trustees do not completely satisfy section 9-5, which requires them to be registered for GST, among other things, when making a taxable supply. Since the Trustees are not registered nor required to be registered for GST, the Trustees are not making a taxable supply of the Properties. It is unnecessary to consider other elements of section 9-5. However, the Trustees are making the supply on behalf of the Partnership and, where all elements of section 9-5 are satisfied from the perspective of the Partnership, the supply will be a taxable supply.
Relevant facts and circumstances
● The 'Trustees' are the trustees for the statutory trust for sale of a vacant block (the Properties).
● The Properties were previously held by several entities (the Partnership).
● The Partnership has been registered for GST at all relevant times.
● The Partnership originally acquired the Properties for the purpose of developing the. However, the only activity undertaken was obtaining development approval.
● The Trustees were appointed as trustees for the statutory trust for sale of the property pursuant to a court order issued by a Court (the Order).
● The Order relevantly provides that -
● The Properties are to be held on statutory trust for sale;
● The Partners are entitled to offer to purchase the Properties;
● The proceeds of sale of the Properties are to be distributed in specific order of priority;
● The Order does not provide express powers to the Trustees to make decisions regarding marketing, advertising, budgeting, engagement of agents and similar.
● The Trustees are not property developers nor are they in the business of buying and selling of property.
● The Trustees were appointed as statutory trustees for sale of the Properties due to their relevant experience.
● The Trustees are not registered for the purposes of GST.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 sections 9-5, 11-5, 23-5.
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