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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012414876729

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Ruling

Subject: Sale of residential property

Question

Is the supply of the two tenanted residential properties subject to GST?

Answer

No, the supply of the two tenanted residential properties is not subject to GST.

This ruling applies for the following periods:

N/A

The scheme commences on:

N/A

Relevant facts and circumstances

You are the owners of two residential premises.

You have an Australian business number (ABN) and you are registered for the goods and services tax (GST).

You have owned the two properties from before the advent of GST and the properties are leased to individuals who occupy them as residential premises for private and domestic use.

The properties are not used for any commercial activity.

You intend to sell the properties as residential premises.

You have not claimed input tax credits relating to the activity of leasing these premises as you have considered them as input taxed supplies.

Relevant legislative provisions

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

Reasons for decision

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states that:

    You make a taxable supply if:

      · you make the supply for *consideration; and

      · the supply is made in the course or furtherance of an *enterprise that you *carry on; and

      · the supply is *connected with Australia; and

      · you are *registered or *required to be registered.

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

(The terms marked with an asterisk are defined at section 195-5 of the GST Act)

In the above section of the GST Act, it states that a supply is not a taxable supply to the extent that it is input taxed.

Subsection 40-65(1) of the GST Act states that:

    A sale of *real property is input taxed, but only to the extent that the property is *residential premises to be used predominantly for residential accommodation (regardless of the term of occupation).

In this case you are selling real property that has been used for residential accommodation. Therefore the sale of the properties is input taxed.

As the supply is not a taxable supply, GST should not be included in the price.


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