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Edited version of private advice
Authorisation Number: 1012684797335
Ruling
Subject: Goods and services tax (GST) and the sale of a property
Question
Will GST be payable on your sale of the property?
Answer
No.
Relevant facts and circumstances
You are not registered for GST.
You purchased a property located in Australia many years ago.
You commenced building on the property a few years ago. The building works took a number of years to be completed. The total cost of construction was considerable. This included the erection of a large, dry concrete driveway, servicing the property and a substantial home. You did not claim input tax credits on the construction costs.
You occupied the residence since completion of the building works (which was a number of years ago). You have only used the property as your residence.
You are planning to sell the property.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 section 9-20
A New Tax System (Goods and Services Tax) Act 1999 section 9-40
Reasons for decision
Summary
GST will not be payable on your sale of the property because it will be a private transaction.
Detailed reasoning
GST is payable on taxable supplies.
You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:
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.
(*Denotes a term defined in section 195-1 of the GST Act)
Enterprise
In accordance with paragraph 9-20(1)(a) of the GST Act, enterprise includes an activity or series of activities done in the form of a business.
In accordance with paragraph 9-20(1)(b) of the GST Act, enterprise includes an adventure or concern in the nature of trade.
Miscellaneous Taxation Ruling MT 2006/1 provides guidance on the meaning of enterprise for ABN purposes.
Goods and Services Tax Determination GSTD 2006/6 states that MT 2006/1 can be relied on for GST purposes.
Paragraph 234 of MT 2006/1 discusses the terms 'business' and 'adventure or concern in the nature of trade'. It states:
234. Ordinarily, the term 'business' would encompass trade engaged in, on a regular or continuous basis. However, an adventure or concern in the nature of trade may be an isolated or one-off transaction that does not amount to a business but which has the characteristics of a business deal.
Paragraph 244 of MT 2006/1 discusses sales of private assets. It states:
244. An adventure or concern in the nature of trade includes a commercial activity that does not amount to a business but which has the characteristics of a business deal. Such transactions are of a revenue nature. However, the sale of the family home, car and other private assets are not, in the absence of other factors, adventures or concerns in the nature of trade. The fact that the asset is sold at a profit does not, of itself, result in the activity being commercial in nature.
In accordance with the fact sheet, Building or renovating your home, you are not liable for GST if you are constructing or selling your family home. This is because you are not considered to be carrying on an enterprise if your property transactions are for private purposes.
The sale of the property in your case will be a private transaction, as it will be a sale of your home. Hence, you will not make the sale in the course or furtherance of an enterprise that you carry on. Therefore, the requirement of paragraph 9-5(b) of the GST Act will not be met.
As you will not meet all of the requirements of section 9-5 of the GST Act, you will not make a taxable supply. Therefore, GST will not be payable on your sale of the property.