• Legal database
Legal database
Disclaimer
This edited version has been archived due to the length of time since original publication.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.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012439704404

Ruling

Subject: GST and transfer of property

Question

Are you making a taxable supply when properties are transferred back to you?

Answer

No, you are not making a taxable supply.

Relevant facts and circumstances

You are registered for GST.

As part of your services you provide grant funding for properties.

In order to support a government objective, grantees, will be wound up and the relevant properties will be transferred to you before being re-granted.

This is being done in accordance with the various funding arrangements as governed by relevant legislation.

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 9-10

A New Tax System (Goods and Services Tax) Act 1999 Section 9-40

Summary

You are not making a taxable supply. This is because the properties are being transferred by operation of the various funding arrangements governed by legislation rather than by any action taken by you.

Reasons for decision

Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity must pay GST on any taxable supply that it makes.

Under section 9-5 of the GST Act you make a taxable supply if:

    (a) you make a supply for *consideration; and

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

    (c) the supply is *connected with Australia; and

    (d) 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 under the exemptions.

    Note: Definitions of asterisked terms are provided in the Dictionary under section 195-1 of the GST Act.

The first requirement for a taxable supply is that there must be a supply and consideration, and that there must be a sufficient connection between the two. For the purposes of this ruling, paragraphs (b), (c) and (d) will be taken to be satisfied.

The term 'supply' is defined in section 9-10 of the GST Act as 'any form of supply whatsoever' and includes:

    · a supply of goods

    · a supply of services

    · the creation, grant, transfer, assignment or surrender of any right, and

    · an entry into, or release from an obligation:

      o to do anything

      o to refrain from an act, or

      o to tolerate an act or situation.

Proposition 5 of Goods and Services Tax Ruling GSTR 2006/9 'Goods and services tax: supplies' assists in analysing a transaction and it provides that to make a supply an entity must do something.

Of relevance to this case is paragraph 72 of GSTR 2006/9 which outlines the comments of Underwood J in Shaw v. Director of Housing and State of Tasmania (No.2) 2001 ATC 4054; (2001) 46 ATR 242; [2001] TASSC 2:

    His Honour was of the view that GST only applies where the 'supplier' makes a voluntary supply and not where a supply occurs without any action by the entity that would be the 'supplier' had there been a supply. He considered the actions of the judgment creditor with respect to the extinguishment of the debt when the judgment debtor made the payment of the judgment sum to meet the judgment debtor's obligations.

Therefore, you are not making a supply in accordance with section 9-10 of the GST Act. Since there is no supply there can be no supply for consideration as required by paragraph 9-5(a) of the GST Act.

Accordingly, you are not making a taxable supply.


Back to top