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Edited version of your written advice
Authorisation Number: 1051459117691
Date of advice: 27 November 2018
Ruling
Subject: Goods and Services Tax
Question
Will GST be payable on the sale of the property?
Answer
No.
Relevant facts and circumstances
● You are the registered proprietor of the property.
● You bought the property a few decades ago, with the intention of eventually retiring there and earning a living from farming.
● You have constructed stock yards, shedding and internal fencing on the property.
● You are not registered for GST.
● The grazing property has been used for agistment since it was purchased.
● After you bought the property, a small house was constructed on the property.
● You have subsequently used the house for overnight stays when there was work to be done on the property.
● The prospect of retiring there is no longer an option for you.
● All agistment activities have now terminated. The property is no longer being agisted.
● You have decided to sell the property which comprises land and a house.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 7-1
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
Reasons for decision
Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies.
Taxable supply
Under section 9-5 of the GST Act, you make a taxable supply if all the following requirements are met:
● you make the supply for consideration
● the supply is made in the course of carrying on an enterprise
● the supply is connected with the indirect tax zone (that is, Australia)
● you are registered or required to be registered for GST, and
● the supply is neither GST-free nor input taxed.
You are currently not registered for GST. Therefore, in deciding whether the sale of the property is a taxable supply, we need to determine whether at the time of sale, you will be required to be registered for GST.
Are you required to be registered?
Under section 23-5 of the GST Act, you are required to be registered if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold.
The applicable registration turnover threshold is $75,000. You have a GST turnover that meets the registration turnover threshold if your current GST turnover is at or above $75,000 and your projected GST turnover is not below $75,000.
Goods and Services Tax Ruling GSTR 2001/7 explains the meaning of GST turnover and the effect of section 188-25 of the GST Act on the calculation of projected GST turnover. GSTR 2001/7 is available on our website at www.ato.gov.au
In calculating your GST turnover under Division 188 of the GST Act certain supplies are excluded. Section188-25 of the GST Act requires you to disregard the following when calculating your projected annual 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.
On the facts provided, we consider that you will not be required to be registered for GST at settlement. As you are not registered for GST and will not be required to be registered for GST at the time of sale, the sale will not meet all of the requirements for a taxable supply under section 9-5 of the GST Act. Consequently, GST will not be payable on the sale of the property.
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