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Edited version of your written advice
Authorisation Number: 1051494347997
Date of advice: 22 March 2019
Ruling
Subject: GST and sale of real property
Question
Will you be required to register for the goods and services tax (GST) when you sell your Land?
Answer
No.
This ruling applies for the specified period.
The scheme commences on the specified date.
Relevant facts and circumstances
● You hold the legal and beneficial ownership of the Land.
● The Land has been used by another entity exclusively for a business that the entity has carried on for decades.
● You inherited the Land from your parent many years ago.
● You have allowed the other entity to continue operating their business on the Land.
● You receive a salary as an employee and you do not carry on any other business or enterprise activities yourself.
● You propose to sell the Land (Proposed Sale) as is, to a third party.
● You are not registered for GST.
● You do not
○ derive income from the Land;
○ carry on any enterprise or business yourself in any capacity;
○ charge the other entity any rent or otherwise, whether monetary or non-monetary consideration, for the occupation and use of your Land.
● You do not make and you are not likely to make any supplies for consideration in the 11 months up to and including the month of the Proposed sale.
● You will not make and you are not likely to make any supplies for consideration in the 11 months after and including the month of the Proposed Sale.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 23-5,
A New Tax System (Goods and Services Tax) Act 1999 subsection 188-10(1), and
A New Tax System (Goods and Services Tax) Act 1999 section 188-25.
Reasons for decision
Requirement to be registered for GST
Section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity is required to be registered for GST purposes if both of the following requirements are met:
● it is carrying on an enterprise; and
● its GST turnover meets the registration turnover threshold (which is currently $75,000 for entities other than non-profit entities).
Registration turnover threshold
Subsection 188-10(1) of the GST Act provides that you have a GST turnover that meets the registration turnover threshold if:
● your current GST turnover is at or above the registration turnover threshold, and the Commissioner is not satisfied that your projected GST turnover is below the registration turnover threshold, or
● your projected GST turnover is at or above the registration turnover threshold.
In calculating your GST turnover under Division 188 of the GST Act certain supplies are excluded. Section 188-25 provides that when calculating your projected GST turnover, you do not include any supplies made, or likely to be made by you:
● by way of transfer of ownership of a capital asset, or
● solely as a consequence of ceasing an enterprise or substantially and permanently reducing the size or scale of your enterprise.
On the facts provided, we consider that your GST turnover will not meet the GST registration turnover threshold at the time of the Proposed Sale. Consequently, you will not satisfy all the requirements of section 23-5 of the GST Act and you will not be required to be registered for GST at the time of the Proposed Sale of your Land.
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