Edited version of private advice

Authorisation Number: 1051831628711

Date of advice: 27 April 2021

Ruling

Subject: GST and the supply of residential premises

Question

Is the sale of each of the residential units by you a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999?

Answer

No.

The supply of the residential units by you are not that of new residential premises therefore are supplies that are input taxed. As such the supply is not a taxable supply under section 9-5 of the GST Act.

This ruling applies for the following period:

1 January 20XX to quarter ending 31 December 20XX

The scheme commences on:

1 January 20XX

Relevant facts and circumstances

In 20XX you, together with your then spouse purchased a vacant block of land (Property) as joint tenants with each having a 50% share in ownership. Together we refer to you and your former spouse as 'the Owners'.

The consideration provided for the Property by the Owners was an amount of $XX.

You subsequently constructed a number of residential units (Units) on the Property.

You and/or your former spouse (as individuals) were not registered for GST at the time of acquiring the Property and have not claimed any input tax credits in respect of the construction or ongoing costs relating to the Units.

However historically you and your former spouse were partners in a partnership for an unrelated business (Partnership Business). The Partnership Business was registered for GST. The Partnership Business has also never claimed any input tax credits on the development of the Units or acquisitions relating to the Units.

Since construction of the residential premises (i.e. the Units) was complete over ten years ago each residential premise has been rented and the supply has been treated as input taxed. As such no GST has been charged on the rent in respect of each unit.

In 20XX the title was changed by the Owners from joint tenants to tenants in common in which you hold a 50% share in ownership in the Property.

You have recently registered for GST as a sole trader but that is for another unconnected business.

Since construction ceased the owners separated and were subsequently divorced. However, they still jointly own the Units as tenants in common and currently wish to sell them as a part of their matrimonial settlement. A Family Court Order to this effect was also made at a hearing of the Family Court.

For the purposes on this request upon sale of each Unit, each owner will be disposing of their 50% in the property (i.e. each Unit) to a third party.

The Units were subdivided to separate titles in 20XX on the advice of a real estate agent who said the Owners were likely to achieve a greater return overall and sell the units more easily if they were on separate titles.

Currently the Units continue to be individually rented out.

Relevant legislative provisions

A New Tax System (Goods and Services Tax Act) 1999 section 9-5

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