Edited version of private advice

Authorisation Number: 1052365430568

Date of advice: 26 February 2025

Ruling

Subject: GST - new residential premises

Question

Will the sale of xxxx (the Property) be a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. It will not be considered a taxable supply pursuant to section 9-5 of the GST Act as xxxx (You) are not making the supply in the course or furtherance of an enterprise that they carry on.

This ruling applies for the following periods:

1 July 20YY to 30 June 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

On xxxx, xxxx (Company) and xxxx (Individual A) purchased a property (Property) as joint tenants.

Between the purchase settlement date and the date of the private ruling, the Council changed the address of the Property.

Despite the change in address by the Council, the Property remains the same property and the Folio Identifier of the property also remains unchanged.

There was no surrounding or additional land purchased.

Xxxx (Individual B) is the Director of the Company and partner of Individual A.

At the time of purchase, the Property was a vacant ten-acre rural land parcel.

The intended use of the Property by Individual A and the Company has always been a home for Individual B and Individual A to retire in, and not for any other purposes such as the development of the Property for sale.

Neither the Company, Individual A nor Individual B have any previous history of undertaking any property development activities in any capacity. They also have no intention of undertaking any property development activities in any capacity in the future.

As advised, it was decided that the Company would be the entity instead of Individual B who would purchase the Property with Individual A due to financing reasons. Individual B and Individual A had discussions around financing options but ultimately no financing from external parties was required and the Property was purchased with the Company's cash funds and cash loaned to the Company from Individual B and Individual A. There is no formal loan agreement for these loaned funds.

The Company is not registered for GST.

Individual A is not registered and not required to be registered for GST purposes.

In xxxx, a building contact was entered into by Individual A and the Company for the construction of a residential building at the Property for use as Individual B and Individual A's primary place of residence for their retirement purposes.

The Company and Individual A did not organise the construction themselves and did not set up a business organisation to manage the development.

The construction of the Property was entirely managed by a third party.

The occupancy certificate for the Property was issued in xxxx. The Property has remained vacant since its construction.

No input tax credits have been claimed by either the Company or Individual A in relation to the purchase of the Property or on any acquisitions made in relation to the construction of the residential building, or any related works.

For income tax purposes, no expenses have been claimed as deductions by either the Company or Individual A in relation to the Property.

The intended use of the Property also involves Individual B and Individual A using the Property as their retirement home for no consideration payable to the Company and/or Individual A. This intended use of the Property by Individual A and the Company has not changed.

In xxxx, Individual A was diagnosed with a medical condition. Due to this, Individual A experienced a significant reduction in their physical capacity and was unable to return to work. This unexpected change in circumstances resulted in Individual B and Individual A concluding that it is not possible to retire at the Property.

Individual B and Individual A contend that due to the size, nature and the quantity of the manual work involved, they want to sell the Property.

The Property is recorded as a company asset in the books of the Company.

The Company operates as a recruitment services enterprise and their supplies include leasing activities.

Relevant legislative provisions

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

A New Tax System (Goods and Service Tax) Act 1999 section 40-65

A New Tax System (Goods and Services Tax) Act 1999 section 40-75

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