Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1051482181185

Date of advice: 12 February 2019

Ruling

Subject: GST and the sale of real property

Question

Is the sale by (you) of real property, “The property” an input taxed sale of a residential premises pursuant to section 40-65 of A New Tax System (Goods and services Tax Act) 1999 (GST Act)?

Answer

Yes, the sale of the property is an input taxed sale of residential premises in accordance with section 40-65 of the GST Act.

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You acquired a property with settlement occurring on dd/mm/yy for a purchase price of $xx. The property was purchased as a residential property and not as a taxable supply or a going concern.

A tax invoice was not issued.

The property which was approximately x acres in size and consisted of:

You entered a contract of sale with a purchaser with settlement occurring on dd/mm/yy for a sale price of $xx.

You stated the following:

The property has remained vacant since purchase.

You confirmed that at the time of sale the brick home was still standing on the property and no substantial renovations had been done and the property remained unchanged from the date of purchase.

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 40-65

A New Tax System (Goods and Service Tax) Act 1999 section 195-1

Reasons for decision

In this ruling:

Section 9-5 provides you make a taxable supply if:

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

Subsection 40-65 (1) provides that a sale of *real property is input taxed, but only to the extent that the property is a *residential premises to be used predominately for residential accommodation (regardless of the term occupation).

The Goods and Services Tax Ruling Goods and services tax: residential premises (GSTR 2012/5) provides the Australian Tax Office’s view of the factors to consider and the characteristics of residential premises.

Paragraph 15 of GSTR 2012/5 provides the definition to satisfy residential premises:

Intention to subdivide and develop is not a relevant factor in determining the characteristics of the premise. This can be substantiated in Paragraph 10 of GSTR 2012/5, which provides that the requirement for residential accommodation does not require an examination of the subjective intention of, or use by any particular person.

Although the size of the land is large (approximately x acres) there is no specific restriction on the area of land that can be included with a building. Paragraph 46 of GSTR 2012/5 states a relevant factor in determining this is the extent to which the physical characteristics of the land and building as a whole indicate the land is to be enjoyed in conjunction with the residential building. The use of the land is not a determining factor in deciding if the land forms part of the residential premises. The one boundary fence surrounding the property supports the fact that the residence and land are to be enjoyed together.

In conclusion

Based on the facts of this case the house on the property satisfies the definition of a residential premise as provided in subsection 40-65(1) of the GST Act.


Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).