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ATO Interpretative Decision

ATO ID 2002/114 (Withdrawn)

Goods and Services Tax

GST and sale of commercial premises with a residential premises attached
FOI status: may be released
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a supply that is partly a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), and partly an input taxed supply under section 40-65 of the GST Act, when it sells commercial premises with residential premises attached?

Decision

Yes, the entity is making a supply that is partly a taxable supply under section 9-5 of the GST Act and partly an input taxed supply under section 40-65 of the GST Act when it sells commercial premises with residential premises attached.

Facts

The entity is a property owner. The entity is selling commercial premises with residential premises attached.

The entity's supply of the commercial premises with residential premises attached does not meet the requirements of a GST-free supply of a going concern under section 38-325 of the GST Act.

The attached residential premises is used predominantly for residential accommodation. The residential premises is neither commercial residential premises as defined in section 195-1 of the GST Act, nor is it new residential premises as defined in section 40-75 of the GST Act.

The entity is registered for goods and services tax (GST). The supply is for consideration. The supply is made in the course of an enterprise carried on by the entity in Australia. The real property is located in Australia.

Reasons for Decision

Under section 9-5 of the GST Act, an entity makes a taxable supply if:

•
it makes a supply for consideration;
•
the supply is made in the course or furtherance of an enterprise that it carries on;
•
the supply is connected with Australia; and
•
the entity is registered or required to be registered for GST.

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

Under subsection 40-65(1) of the GST Act, a sale of real property is input taxed, but only to the extent that the property is residential premises is to be used predominantly for residential accommodation.

The residential premises was used predominantly for residential accommodation before 2 December 1998, and is not commercial residential premises or new residential premises. Therefore, the supply of the attached residential premises is input taxed under subsection 40-65 of the GST Act.

The supply of the commercial premises is not input taxed under Division 40 of the GST Act, nor is it GST-free under Division 38 of the GST Act. The entity is registered for GST, and the supply of commercial premises satisfies the other positive limbs of section 9-5 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act, when it supplies the commercial premises.

Accordingly, the entity is making a supply that is partly a taxable supply under 9-5 of the GST Act and partly an input taxed supply under section 40-65 of the GST Act when it sells commercial premises with residential premises attached.

[Note: he value of a supply that is partly a taxable supply and partly a supply that is GST-free or input taxed, is worked out on a proportional value basis in terms of section 9-80 of the GST Act.]

Date of decision:  12 September 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 9-80
   Division 38
   section 38-325
   Division 40
   section 40-65
   section 40-65(1)
   section 40-65(2)
   section 40-75
   section 195-1

Keywords
Goods & services tax
GST property & construction
GST commercial and residential premises
GST supplies & acquisitions
Taxable supply
Input taxed supplies

Business Line:  GST

Date of publication:  31 January 2002

ISSN: 1445-2782

history
  Date: Version:
  12 September 2001 Original statement
You are here 30 May 2008 Archived

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