Edited version of private advice

Authorisation Number: 1052411537550

Date of advice: 02 July 2025

Ruling

Subject: GST - residential premises

Question 1

Was your sale of the property an input taxed supply of residential premises under section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

Yes, your supply of the property was an input taxed supply of residential premises under section 40-65 of the GST Act. Therefore, you are not liable for GST on the sale of the property.

Relevant facts and circumstances

You are registered for the goods and services tax (GST) from 1 July 20XX.

The land on which the property stands has been owned by you for many years.

The current property was built prior to XX December 19XX. The property has been used continuously as a residence including before and after XX December 19XX.

The property was recently sold for the first time. Included in the sale was a garage and some additional land owned by you.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 40-65(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 40-65(2)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 40-65(2)(b)

A New Tax System (Goods and Services Tax) Act 1999 subsection 40-75(1)

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

Reasons for decision

The term 'residential premises' is defined in section 195-1 of the GST Act to mean land or a building that:

(a) is occupied as a residence or for residential accommodation; or

(b) is intended to be occupied, and is capable of being occupied, as a residence or for

residential accommodation

(regardless of the term of the occupation or intended occupation) and includes a floating home.

In this case there is no doubt that the property meets the requirements of residential premises as defined in section 195-1 of the GST Act

Subsection 40-65(1) of the GST Act provides that a sale of real property is input taxed to the extent that the property is residential premises to be used predominantly for residential accommodation (regardless of the term of occupation).

However, subsection 40-65(2) of the GST Act excludes the supply of new residential premises from being an input taxed supply to the extent that they are commercial residential premises or new residential premises other than those used for residential accommodation before XX December 19XX.

Among other things subsection 40-75(1) of the GST Act defines residential premises as new residential premises where they have not previously been sold as residential premises.

In this case the sale of the property was the first sale. Therefore, the property will meet the definition of new residential premises in paragraph 40-75(1)(a) of the GST Act.

In this situation it needs to be decided whether the property meets the requirements of the exclusion in subsection 40-65(2) of the GST Act

The effect of paragraph 40-65(2)(b) of the GST Act is that a sale of new residential premises that have been used for residential accommodation (regardless of the term of occupation) before 2 December 1998 is an input taxed supply.

Goods and services tax ruling GSTR 2003/3: when is a sale of real property a sale of new residential premises deals with the circumstances in which residential premises are new residential premises states at paragraph 13:

13. Sales of housing which has been used for residential accommodation before 2 December 1998 (either for rental income production or for owner occupation) are not subject to GST as new residential premises. The exceptions are where new residential premises are created through substantial renovations or are built to replace demolished premises on the same land.

Based on the information provided the property has been used continuously for residential accommodation before XX December 19XX. Therefore, the sale of the property is an input tax supply of residential premises.

Additional land owned by you was included in the sale of the property, it needs to be determined whether the additional land can be considered to form part of the premise that is to be used predominantly for residential accommodation or if it is the sale of vacant land.

The relevant principles are discussed in paragraphs 46 and 47 of Goods and Services Tax Ruling 2012/5 Goods and services tax: residential premises (GSTR 2012/5) which states:

Land supplied with a building

46. There is no specific restriction, in the definition of residential premises, on the area of land that can be included with a building. The extent to which land forms part of residential premises to be used predominantly for residential accommodation is a question of fact and degree in each case. A relevant factor in determining this is the extent to which the physical characteristics of the land and building as a whole indicate that 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.

Vacant land

47. Vacant land is not capable of being occupied as a residence or for residential accommodation as it does not provide shelter and basic living facilities. Vacant land is not residential premises.

It is our view in this case that the additional land forms part of the residential premises.

Conclusion

The sale of the property by you was an input tax supply of a residential premises and was not subject to GST.

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