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Edited version of private advice
Authorisation Number: 1012637075117
Ruling
Subject: GST and sale of property
Question:
Is the supply of the property in Australia by Mr & Mrs Z subject to goods and services tax (GST)?
Answer:
No.
Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), 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 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
Input taxed supplies include a supply for residential rent and a sale of residential premises under sections 40-35 and 40-65 of the GST Act, respectively.
Based on the information provided, your sale of the residential property does not satisfy all the requirements of a taxable supply under section 9-5 of the GST Act because:
(i) You are neither registered nor required to be registered for GST; and
(ii) The sale of the property would be an input taxed supply of residential premises.
Relevant facts and circumstances
Mr & Mrs Z (you) are not registered for GST as individuals or as a partnership.
You bought a property in Australia in 200X, for approximately $X. No GST was included in the price on your purchase. A copy of the contract for sale in relation to your acquisition of the property was provided.
You advise that the property is a residential house on several acres of land. You have rented out the property since it was acquired in 200X. Currently, the property is being rented for approximately $X plus expenses per week. The property is rented for residential use only, and not for commercial purposes.
The old residential house has not undergone any substantial renovations (other than general maintenance) and no new buildings have been constructed on the land since your acquisition of the property. You will not undertake any development of the property prior to sale.
You advise that you did not claim any GST on your acquisition of the property or for any expenses in relation to the property.
You intend to sell the property. The sales price could be approximately $X. Your contract for sale to a buyer has not been completed.
You (as individuals or as a partnership) do not receive income from other commercial activities which is more than $75,000.
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 23-5
A New Tax System (Goods and Services Tax) Act 1999, Section 40-40