ATO Interpretative Decision
ATO ID 2001/651 (Withdrawn)
Goods and Services Tax
GST and sale of residential premises that have been used for residential accommodation prior to 2 December 1998FOI status: may be released
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Refer to GSTR 2003/3 and the Property and Construction Industry Partnership - Issues Register - Section 11.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a property owner, making an input taxed supply under section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells residential premises that have been used for residential accommodation prior to 2 December 1998?
Decision
Yes, the entity is making an input taxed supply under section 40-65 of the GST Act when it sells residential premises that have been used for residential accommodation prior to 2 December 1998.
Facts
The entity is a property owner. The entity is selling residential premises. The entity purchased the premises in the early 1990s and has rented them ever since. The premises are used predominantly for residential accommodation. They are not commercial residential premises. The entity has not carried out any substantial renovations to the premises.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under subsection 40-65(1) of the GST Act, the sale of real property is input taxed to the extent that it is residential premises to be used predominantly for residential accommodation. However, subsection 40-65(2) of the GST Act provides that the sale is not input taxed to the extent that the residential premises are:
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- commercial residential premises; or
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- new residential premises other than those used for residential accommodation before 2 December 1998.
The premises are not commercial residential premises. Therefore, it is necessary to determine if the premises fall within the definition of new residential premises. If the premises are new residential premises, the supply will be taxable where the requirements of section 9-5 of the GST Act are satisfied.
Subsection 40-75(1) of the GST Act provides that residential premises are new residential premises if they:
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- have not previously been sold as residential premises and have not previously been the subject of a long-term lease; or
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- have been created through substantial renovations of a building; or
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- have been built, or contain a building that has been built, to replace demolished premises on the same land.
In this case, the premises have been sold previously as residential premises (that is, when the entity originally purchased them). They have not been created through substantial renovations nor have they been built to replace demolished premises on the land. Therefore, the residential premises do not fall within the definition of new residential premises.
Accordingly, the entity is making an input taxed supply under section 40-65 of the GST Act when it sells residential premises that have been used for residential accommodation prior to 2 December 1998.
Date of decision: 17 October 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
section 40-65
subsection 40-65(1)
subsection 40-65(2)
subsection 40-75(1)
Keywords
Goods & services tax
GST property & construction
GST new residential premises
GST residential premises
GST sale of real property
Input taxed supplies
ISSN: 1445-2782
| Date: | Version: | |
| 17 October 2001 | Original statement | |
| You are here | 17 June 2003 | Archived |