Edited version of private advice

Authorisation Number: 1052489516621

Date of advice: 9 April 2026

Ruling

Subject: Income tax and GST - disposal of a property

Questions 1

Is the net profit on the sale of the Property only reportable as a capital gain?

Answer

No.

Question 2

Will the net profit on the sale of the Property be treated as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Question 3

Will section 118-20 of the ITAA 1997 apply to prevent any double taxation by reducing the capital gain made on the sale of the Property by the amount assessed as ordinary income?

Answer

Yes.

Question 4

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

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

Relevant facts and circumstances

On Date 1, Person A and Person B (you) agreed to purchase a block of land subject to title (the Property) which is part of a new housing estate (the Estate).

At the same time, you accepted a quote from a builder to build a house on the block.

At that time, you were living in a multi- unit complex in a unit (the Unit), with the other units being tenanted.

You borrowed from the bank to finance the block and construction of the dwelling. Your loan was recorded as a residential investment loan. The explanation you have given for this is that you already had an owner occupier loan and the bank would not allow you to have two owner occupier loans. You have not provided any objective evidence that you advised the bank that the Property was to be your new home.

You signed a building contract with the builder dated Date 2.

Settlement of the block occurred on Date 3.

The land purchase contract states:

COVENANTS ON THE TITLE

The Purchaser acknowledges that there are covenants on the title designed to maximise property values, the most important, limiting Owners to using only a percentage of the cheaper building materials. A percentage of the external surface (minus windows, doors and roof) needs to be brick, rendered brick, rendered block or stone.

Furthermore, the council require stormwater detention on every home in the municipality, with the council also insisting that each home has one or more rainwater tanks and be plumbed into one of the toilets, so re-use occurs.

The Purchaser must ensure that their builder, designer, draughtsman and/or architect complies with the covenants.

On Date 4,you submitted a development application to the council for construction of the dwelling.

On Date 5,construction of the house commenced.

Construction of the house was completed on Date 6.

The only involvement you had with the construction of the house was construction of fences and basic landscaping.

You experienced setbacks with the new build due to a delay in issuing of the title causing a building price increase and extending the overall timelines by several months.

The Property was listed for sale on Date 7.

The Certificate of Occupancy for the Property was issued on Date 8.

You signed a contract for the sale of the Property on Date 9.

Settlement of the sale occurred on Date 10.

You never lived at the Property.

Prior to the completion of the house at the Property, you did not take any steps to market the Unit or contact any real estate agents in preparation to sell the Unit.

You remain living at the Unit.

Your property ownership history

You have provided a list of all the properties you have purchased and how you used them.

Your experience in the building industry

You have not previously undertaken any subdivision or property development projects.

You have no current plans to be involved in any subdivision or property development projects in the future.

Person B has previously been engaged as a XX agent on a contract basis.

Person B is employed by a home building company as a XX consultant. They have been employed by the company for several years.

The company has been selling house and land packages in the Estate for several years.

Person B was listed as the contact for the company for house and land packages in the Estate that are currently being advertised for sale.

Person A has not been employed in the building industry.

You are not currently associated with any entities in any industry.

You operated a partnership a few years ago which provided some services unrelated to property development.

You are not registered for GST.

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 9-20

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

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

A New Tax System (Goods and Services Tax) Act 1999 section 184-1

A New Tax System (Goods and Services Tax) Act 1999 section 188-10

A New Tax System (Goods and Services Tax) Act 1999 section 188-20

A New Tax System (Goods and Services Tax) Act 1999 section 188-25

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

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 108-5

Income Tax Assessment Act 1997 section 118-20

Income Tax Assessment Act 1997 Part 3-1

Income Tax Assessment Act 1997 Part 3-3

Questions 1 and 2

Summary

The sale of the Property is not only reportable as a capital gain as the net profit will be treated as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) as it is considered to be profit from an isolated profit-making commercial transaction.

Detailed reasoning

Subsection 6-5 (1) of the ITAA 1997 provides that your assessable income includes income according to ordinary concepts, which is called ordinary income.

Section 6-10 of the ITAA 1997 provides that your assessable income also includes some amounts that are not ordinary income, which is assessable as statutory income.

There are 3 ways the proceeds from a property development can be treated for taxation purposes:

•                 Assessable ordinary income under section 6-5 of the ITAA 1997 as income from carrying on a business of property development;

•                 Assessable ordinary income under section 6-5 of the ITAA 1997 as income from an isolated commercial transaction with a view to profit; or

•                 A mere realisation of a capital asset, assessable under Parts 3-1 and 3-3 of the ITAA 1997 as statutory income.

Carrying on a business

Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? (TR 97/11) provides the Commissioner's view on whether a taxpayer is carrying on a business. Although TR 97/11 deals with the issues in determining whether a taxpayer is carrying on a business of primary production, the same principles can be applied to the question of whether a taxpayer is carrying on any type of business including property subdivision and development.

Paragraph 13 of TR 97/11 states that the following indicators are relevant in determining whether a taxpayer is carrying on a business:

(a)             whether the activity has a significant commercial purpose or character;

(b)             whether there is repetition and regularity of the activity;

(c)             whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business;

(d)             whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit; the size, scale and permanency of the activity; and

(e)             whether the activity is better described as a hobby, a form of recreation or a sporting activity.

Whether a business is being carried on depends on the impression gained from looking at all the indicators against the case facts and whether these indicators provide the operations with a commercial flavour.

Isolated commercial transactions

Taxation Ruling TR 92/3: Income tax: whether profits on isolated transactions are income (TR 92/3) provides guidance in determining whether profits from isolated transactions are ordinary income and therefore assessable under section 6-5 of the ITAA 1997.

The term 'isolated transactions' in paragraph 1 of TR 92/3 refers to:

•                 those transactions outside the ordinary course of business of a taxpayer carrying on a business, and

•                 those transactions entered into by non-business taxpayers.

Whether a profit from an isolated transaction is ordinary income is a question of fact and depends very much on the individual circumstances of the case.

Paragraph 6 of TR 92/3 provides that profits from an isolated transaction is generally income when both of the following elements are present:

•                 the intention or purpose of the taxpayer in entering into the transaction was to make a profit or gain; and

•                 the transaction was entered into, and the profit was made, in the course of carrying on a business or in carrying out a business operation or commercial transaction.

Paragraph 13 of TR 92/3 outlines the following factors which may be relevant when considering whether an isolated transaction amounts to a business operation or commercial transaction:

•                 the nature of the entity undertaking the operation or transaction;

•                 the nature and scale of other activities undertaken by the taxpayer;

•                 the amount of money involved in the operation or transaction and the magnitude of the profit sought or obtained;

•                 the nature, scale and complexity of the operation or transaction;

•                 the manner in which the operation or transaction was entered into or carried out;

•                 the nature of any connection between the relevant taxpayer and any other party to the operation or transaction;

•                 if the transaction involves the acquisition and disposal of property, the nature of the property, and

•                 the timing of the transaction or the various steps in the transaction.

In considering the taxpayer's intention, TR 92/3 states that it is not the subjective intention or purpose of the taxpayer that is relevant. Rather, it is the taxpayer's intention or purpose discerned from an objective consideration of the facts and circumstances of the case.

TR 92/3 also states that it is not necessary that the intention or purpose of profit-making be the sole or dominant intention or purpose for entering into the transaction. Rather, a taxpayer may have multiple intentions or purposes and all that is required is that sale for a profit be 'a not insignificant' intention or purpose (McCarthy v. FC of T [2021] AATA 1511 (McCarthy) and McCurry v. FV of T (1998) 39 ATR 121; 98 ATC 4487 (McCurry)).

In McCarthy, the taxpayers demolished the dwelling on a property, subdivided it and then sold the two vacant lots for a profit. The taxpayer's argued that the development was of such a small scale it was not a commercial transaction. However, the Tribunal held that it was the sort of transaction that a person in business might undertake and therefore it was a commercial transaction.

The taxpayers in McCarthy also argued that their original intention had been to hold the property as a rental investment to generate income but due to financial reasons they had to change their plan to hold the property long-term. The Tribunal stated that a taxpayer's stated intention must be considered in light of all the evidence and what eventually transpired. It also stated that a profit-making purpose does not have to be the sole or even the predominant purpose for entering into a transaction; it just has to be a not insignificant purpose. The Tribunal concluded that even if the taxpayer originally had another purpose for entering into the transaction, the possible subdivision and sale of the property was also a 'live option' that the taxpayers considered at the time. Therefore, the Tribunal found that the profit made on the sale of the two subdivided lots was assessable as ordinary income under section 6-5 of the ITAA 1997.

In McCurry, the taxpayers purchased a property, demolished the existing dwelling on it, and built three townhouses which were placed on the market a year after construction was completed. The taxpayers claimed that their original intention had been to construct townhouses to rent out and that they were only sold because of the financial difficulties they were encountering.

The Federal Court in McCurry held that:

•                 The development was a sufficiently businesslike venture to constitute a commercial transaction.

•                 A taxpayer may have more than one intention or purpose in mind when entering into a property development.

•                 When considering intention, the court is entitled to have regard not only to the taxpayer's stated intention but also the surrounding facts and to the events which actually occurred, as those events, by hindsight, can throw light on the considerations the taxpayer had at the time the transaction was entered into. The court stated: 'That which a person does is a guide to that which he had in mind to do'.

•                 Although the taxpayers may originally have had the intention to rent out the townhouses on completion, having regard to all the facts and events that occurred, it was considered that they also had in mind the possibility of selling the developed property at a profit.

•                 The profit on the sale of the townhouses was profit from an isolated commercial transaction and therefore assessable as ordinary income.

Mere realisation

Where the sale of land is a 'mere realisation', rather than sold in the course of carrying on a business or an isolated profit-making transaction, the sale is on capital account and CGT rules will generally apply. These proceeds are not ordinary income.

As stated in paragraph 36 of TR 92/3, the courts have often said that the profit on the mere realisation of an investment will not be income, even where the taxpayer goes about the realisation in an enterprising way.

However, where the original asset is transformed, this goes beyond a mere realisation of an investment. The extent of the transformation will be relevant when determining whether the undertaking is profit making in nature.

Application to your circumstances

Given the facts in your case, especially the 'one-off' nature of the activity and its relatively modest scale, we do not consider you were carrying on a business of property development.

However, the profit will still be assessed as ordinary income under section 6-5 of the ITAA 1997 if it resulted from an isolated commercial transaction which was entered into with a view to making a profit.

Although your property development was not large in scale, it is comparable to those in McCarthy and McCurry which were held to be commercial transactions as although they were not large or complex, they were of a sort that a person in business might undertake. Similarly, it is considered that your property development, consisting of the purchase of vacant land, construction of a new building, and sale on construction completion, is also a transaction that a businessperson might undertake. Consequently, your property development was a commercial transaction.

As your property development has been determined to be a commercial transaction, it will be assessable as ordinary income if you had a profit-making intention at the time of entering into the transaction, which is considered to be Date 3, when your purchase of the land was settled.

As discussed previously, it is not the subjective intention or purpose of the taxpayer that is relevant; rather, it is the taxpayer's intention or purpose discerned from an objective consideration of the facts and circumstances of the case.

Also, it is not necessary for profit-making to be the sole or dominant intention or purpose for entering into the transaction. Rather, as stated in McCarthy and McCurry, a taxpayer may have multiple intentions or purposes and all that is required is that sale for a profit be 'a not insignificant' intention or purpose. That is, it is sufficient that the taxpayer had in mind the 'live option' of selling for a profit when they commenced the development.

Your private ruling application stated that your intention on acquiring the land was to build your future home but that around the time of completion you became increasingly concerned about the style of the neighbouring houses and in your view the quality of homes in the area did not match up with your expectations and you believed the lower standards of homes did not meet the prestige levels you were expecting. Your private ruling application also stated that you re-considered your proximity to family and work given that Person B had decided to remain working for longer than previously anticipated.

When asked for further detail regarding your change in stated attention, you advised the following:

•                 Your original intention in acquiring the land and building the new dwelling was because you wanted to move from your existing home. You were living in a unit complex and were not enjoying living there as the other units were tenanted and you experienced occasional conflicts. Also, you were looking for more space and the ability to own pets which was not allowed by the body corporate.

•                 Setbacks were experienced with the new build due to a delay in issuing title causing a building price increase, with overall timelines increased by several months and you were losing enthusiasm in the project.

•                 You reiterated your disappointment in the quality of the homes that were being built in the Estate

•                 By the time the new dwelling was mostly finished, you were happy with the home itself but not with the area and reconsidered living there.

•                 You decided to try selling via the company you were employed by rather than an agent and secured a buyer.

We have concerns whether at the time of entering into the development on Date 3, when your purchase of the land was settled, that you had no thought of the possibility of sale and subsequently only sold due to the reasons mentioned above. Our concerns are due to the following:

•                 You state that you entered into the development to build your new home as you were unhappy living at the Unit. If your only reason for entering into the development of the Property was because you wanted to move from the Unit then it would be expected that after the sale of the Property, you would find a different property to make your new home. Yet two years after the sale of the Property you continue to live at the Unit.

It is noted that you also mentioned that you had re-considered your proximity to family and work as Person B had decided to continue working for longer than anticipated. However, even so, if you were so unhappy at the Unit that your only reason for building a new house was for it to be your new home, then it would be expected that you would acquire a new home in the same area as the Unit but this has not occurred.

•                 The main reason you gave for selling the Property was that nearing completion you became increasingly concerned with the standard of the other houses being built in the Estate. However, you have provided no objective evidence to support this contention. Rather, the objective facts available run counter to your contention.

Person B is employed by a home building company as a XX consultant and has been employed by them for several years. Their employer has been selling house and land packages in the Estate for several years. Given this, it would be expected that Person B would have been aware of the standard of houses being built in the Estate well before your Property was nearing completion.

It is also noted that the Estate is subject to building covenants which are legally binding agreements imposed by land developers to maintain a certain standard within their estates. Your land purchase contract includes a covenants clause and notes that they are designed to maximise property values and must be complied with. Given Person B's employment as a XX consultant, it is expected that they especially, would have been aware of the details of the covenants for the Estate and therefore would have known the quality of houses to expect.

Also, examination of publicly available information of the completed properties in the Estate does not indicate that they are of a notably lower standard than your Property. Rather that information indicates that they are of at least a similar standard.

•                 You stated that it was when the Property was nearing completion that you reconsidered making the Property your home. This change in intention purportedly happened only a few months before you were due to move in. Despite that short-time frame, you had yet to make any attempts to market the Unit or even contact any real estate agents in preparation for selling the property. Given the lead time required in selling a property and the possibility of utilising an extended settlement period if required, it would have been expected that many months before the completion of the Property you would have at least contacted a real estate agent in relation to the sale of your existing home.

•                 You also advised that as the issuing of title for the block delayed construction by several months, you began losing enthusiasm in the building of the Property. Although you have not previously been involved in any subdivision or property development projects, we consider that Person B's employment in the building industry means that you would have a level of knowledge and understanding regarding issues and delays that may occur during the building process. That is, you would be well aware that delays are not uncommon in the building industry.

Also, if your only reason for building the Property was to make it your new home because you were unhappy living at your existing home, then your reaction to the delayed completion, being to sell the property, is the opposite of what would be expected. Rather, it would be expected that the delay would heighten your anticipation in being able to move into the Property and make it your new home as soon as possible as opposed to lessening your eagerness to move into it.

To summarise the relevant objective facts in your case:

•                 Person B works as a XX consultant.

•                 You engaged Person B's employer (the employer) to build the Property.

•                 You engaged the employer to sell the Property.

•                 You listed the Property for sale through the employer before the Certificate of Occupancy was issued.

•                 It was sold shortly thereafter with you never having lived in it.

•                 Despite your statement that you only re-considered making the Property your home when it was nearing completion, you had made no preparations to sell your existing home.

•                 No objective evidence has been provided to support your contention that you originally intended to make the Property your new home.

•                 Several years after the sale of the Property, you continue to live in the Unit despite your claim that it was your unhappiness living at the Unit which was your only reason for acquiring and building the Property (so that you could move there).

As discussed previously, it is not the subjective intention of the taxpayer that is relevant but rather their intention as discerned from an objective consideration of the facts and circumstances of the case. Also, as stated in McCurry and McCarthy, what actually eventuated sheds light on the taxpayer's intention on commencement of the development (per McCurry: 'That which a person does is a guide to that which he had in mind to do'). And as stated earlier, it is not necessary for profit-making to be the sole, or even dominant, intention or purpose for entering into the transaction.

It may be that your primary purpose was as you state, to make the Property your home. However, having regard to all the objective facts and what eventually transpired, we consider that when you commenced the development, you had in mind, at least as a 'live option', the possibility of selling the completed property in the short term for a profit.

You have not 'merely realised' an asset as you bought the land, constructed a building on it, then immediately sold it. It may be different if you had used the completed property as your home or a rental property for a substantial period before selling it. In those circumstances you may have 'merely realised' your home or rental property. But you did not use the property for any purpose after you developed it; rather, you immediately sold it.

When viewed objectively, the development and sale of the Property is an isolated profit-making commercial transaction. Consequently, your net profit on the sale of the Property is assessable as ordinary income under section 6-5 of the ITAA 1997.

Question 3

Summary

The capital gains tax (CGT) provisions in Part 3-1 and Part 3-3 of the ITAA 1997 will apply in relation to the sale of the Property. However, section 118-20 of the ITAA 1997 will apply to prevent any double taxation by reducing the capital gain made on the sale by the amount assessed as ordinary income.

Detailed reasoning

Section 108-5 of the ITAA 1997 provides that a CGT asset is any kind of property, or a legal or equitable interest that is not property. Real property is a CGT asset in accordance with section 108-5 of the ITAA 1997.

Section 104-10 of the ITAA 1997 provides that CGT event A1 happens if you dispose of a CGT asset.

Section 118-20 of the ITAA 1997 is an anti-overlap provision which operates to reduce capital gains by any amounts which are included in your assessable income under a provision of the ITAA outside of Part 3-1 of the ITAA 1997, for example, as ordinary income under section 6-5 of the ITAA 1997. Refer to QC 71028 Tax consequences on sales of small-scale land subdivisions on our website for worked examples of the income tax and GST consequences.

Application to your circumstances

As outlined in the reasoning for Questions 1 and 2, the net profit from the sale of the Property will be assessable under section 6-5 of the ITAA 1997.

As the Property is also a CGT asset, proceeds from the sale of the property will be subject to the CGT provisions in Part 3-1 of the ITAA 1997.

On the sale of the property, CGT event A1 will occur. Any capital gain made on the sale is included in your assessable income. However, you can reduce any capital gain from the sale of the property by the net profit from the sale that is included in your assessable income as ordinary income.

Question 4

Summary

The sale of the Property was a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Reasons for decision

Section 9-5 of GST Act provides that you make a taxable supply if:

(a)             you make the supply for consideration; and

(b)             the supply is made in the course or furtherance of an enterprise you carry on; and

(c)             the supply is connected with the indirect tax zone; and

(d)             you are registered or required to be registered

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

For the purpose of section 9-5 of the GST Act, the term 'you' applies to entities generally. An entity is defined in section 184-1 of the GST Act to include an individual and a partnership, amongst others.

The Property was owned by two individuals; thus, it must be determined whether for GST purposes it was supplied by each individual separately or by a partnership.

Co-owners of a property are considered partners in a partnership for tax law purposes where they are in receipt of ordinary or statutory income jointly. Therefore, for the purpose of section 9-5 of the GST Act, the entity that made the supply of the Property was the partnership of Person A and Person B.

Paragraphs 9-5(a) and 9-5(c) of the GST Act are satisfied because the supply of the Property was for made for consideration; and it is connected with the indirect tax zone as the Property is situated in Australia. What remains to be determined is whether paragraphs 9-5 (b) and 9-5(d) of the GST Act are also satisfied.

Paragraph 9-5 (b) of the GST Act - Whether the supply was made in the course or furtherance of an enterprise that you carry on

The term enterprise is defined in subsection 9-20(1) of the GST Act to include, amongst other things, an activity or series of activities done in the form of a business, or in the form of an adventure or concern in the nature of trade, or on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property.

Section 195-1 provides that "carrying on" an enterprise includes doing anything in the course of the commencement or termination of the enterprise

Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number considers the meaning of the terms 'entity' and 'enterprise' for the purposes of the A New Tax System (Australian Business Number) Act 1999. According to Goods and Services Tax Determination GSTD 2006/6 Goods and services tax: does MT 2006/1 have equal application to the meaning of 'entity' and 'enterprise' for the purposes of the A New Tax System (Goods and Services Tax) Act 1999? the principles in MT 2006/1 apply equally to the terms 'entity' and 'enterprise' and can be relied upon for GST purposes.

According to paragraphs 262-263 of MT 2006/1, the question of whether an entity is carrying on an enterprise arises where there are 'one-offs' or isolated real property transactions. The issue to be decided is whether the activities are an enterprise in that they are of a revenue nature because they are considered to be activities of carrying on a business or an adventure or concern in the nature of trade as opposed to the mere realisation of a capital asset.

A number of public rulings have issued, including TR 92/3 and TR 97/11 which state factors to consider when determining whether a business is carried on or whether an isolated transaction amounts to a business. Paragraph 266 of MT 2006/1 provides that in determining whether isolated transactions are an enterprise or are the mere realisation of a capital asset, it is necessary to examine the facts and circumstances of each particular. No single factor will be determinative.

Application to your circumstances

Our view is that the purchase of the land, the construction of the house and the subsequent sale of the Property were activities of an adventure or concern in the nature of trade rather than the mere disposal of a capital asset. The following information that you provided indicates that the isolated transaction was of a commercial nature:

•                 Person B was previously engaged as a XX agent. Currently, they are employed by the employer as a XX consultant.

•                 The employer has been selling house and land packages in the Estate for several years for which Person B is listed as the contact person.

•                 You purchased the block of land and signed a building contract with the employer several years ago.

•                 While you intended to make the Property your new home, you obtained a residential investment loan instead of an owner occupier loan.

•                 Upon completion, the Property was listed for sale through the employer. After the Certificate of Occupancy was issued, you entered into a contract for the sale of the Property.

•                 Your main reason for building the Property was to move out of the Unit; however, you did not take any steps in marketing the Unit even after you sold the Property.

•                 You did not live in the Property. You continued to live in the Unit.

The activities you have undertaken in relation to the Property constitute an enterprise; thus, the sale of the Property was made in the course of that enterprise. Paragraph 9-5(b) of the GST Act is satisfied.

Paragraph 9-5 (d) of the GST Act -Whether you are registered or required to be registered for GST

Section 23-5 of the GST Act provides that an entity is required to be registered for GST if:

(a)             the entity is carrying on an enterprise; and

(b)             the entity's GST turnover meets the registration turnover threshold.

Currently, the registration turnover threshold is $75,000 ($150,000 for non-profit organisations).

As you were carrying on an enterprise at the time the XX was sold, paragraph 23-5(a) of the GST Act is satisfied. What remains to be determined is whether your GST turnover met the registration turnover threshold at that time.

According to subsection 188-10(1) of the GST Act, an entity has a GST turnover that meets a particular turnover threshold if:

(a)             the entity's current GST turnover is at or above the turnover threshold, and the Commissioner is not satisfied that the entity's projected GST turnover is below the turnover threshold; or

(b)             the entity's projected GST turnover is at or above the turnover threshold.

Subsection 188-15(1) of the GST Act provides that an entity's current GST turnover at a time during a particular month is the total value of all the supplies made or are likely to be made during the 12 months ending at the end of that month.

Subsection 188-20(1) of the GST Act provides that an entity's projected GST turnover at a time during a particular month is the total value of all the supplies made or are likely to be made during the month and the next 11 months.

Paragraph 188-25(a) of the GST Act provides that any supply made, or likely to be made, by an entity by way of transfer of ownership of its capital asset is disregarded in working out the entity's projected GST turnover.

Application to your circumstances

The Property was sold for $XXX,XXX. As the sale was not a supply made by way of transfer of ownership of a capital asset it is not disregarded in working out your GST turnover. Generally, the term 'capital assets' refers to those assets that make up 'the profit yielding subject' of an enterprise. They are often referred to as 'structural assets' and may be described as 'the business entity, structure or organisation set up or established for the earning of profits'

At the time of the supply, your GST turnover met the registration turnover threshold as your current and projected GST turnover were above the threshold. Paragraph 23-5(b) of the GST Act is satisfied.

Accordingly, you were required to be registered for GST as a partnership at the time of the supply of the Property. Paragraph 9-5(d) of the GST Act is satisfied.

Taxable supply

The requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act are met; therefore, the sale of the Property was a taxable supply.

The sale was not an input taxed supply under section 40-65 of the GST Act which provides that a sale of residential premises is input taxed unless the residential premises are new residential premises. The Property is new residential premises.

There is no provision in the GST Act under which the sale of the Property would be GST-free.

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