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Edited version of your written advice
Authorisation Number: 1012706211621
Ruling
Subject: GST and real property
Question
Will your supply of the property be a taxable supply?
Answer
No, your supply of the property will be a mixed supply consisting of:
• Vacant land Taxable supply
• Leased commercial premises GST-free supply of a going concern
• Residential premises Input taxed supply
Your valuation has been prepared in accordance with the relevant professional standards and satisfies the relevant requirements of MSV 2009/1. Therefore, the Commissioner accepts the values ascribed to the various proposed lots.
Relevant facts and circumstances
You are registered for GST.
You hold the property on behalf of the beneficiaries.
The property is comprised of separately identifiable portions. You have applied for, and received, approval to subdivide the land into vacant land, commercial premises and residential premises.
The commercial premises are currently leased to the business operator.
The detached dwelling was built in 200X and has been rented out since then.
The commercial premises and the residential premises are both within a complex which is fenced. They share a common driveway. The vacant land is external to this fenced area.
The beneficiaries have entered into an arrangement whereby one of them will buy the property outright. Because the purchasing beneficiary is entitled to one quarter of the estate they will pay you X% of the value of the property. The balance will be transferred by way of bequest.
The Purchaser is not registered for GST, however, as per the sales contract, has undertaken to be registered for GST at the time of supply.
The Special conditions state that the sale is a combination of separately identifiable taxable and non-taxable parts including the sale of a going concern of the whole of a commercial premises, residential premises and vacant land.
Under the Standard Conditions, the vendor warrants that:
(i) between the date of this Contract and the Date for Completion the Vendor will carry on the Enterprise: and
(ii) the Property (together with any other things that must be provided by the Vendor to the Purchaser at the Date for Completion under a related agreement for the same Supply) is all of the ;things necessary for the continued operation of the Enterprise.
The Special Conditions state that the Contract is subject to and conditional upon the Purchaser entering into a covenant with the Tenant, to be bound to and execute an Agreement to Lease, covenant or new Lease with the Tenant on the same terms and conditions as the current Agreement to Lease and Leases on or before completion that will allow the Tenant to register the new Lease. Annexure "C" to this Contract.
A professional valuer determined the value of the individual parts of the land and an aggregated value of the segments of the property to be $xxxx.
The 'Direct Comparison Approach' was used to determine values for the vacant land and the residential premises, on the assumption of separate titles for each. The "Capitalisation Approach" was used to determine a value for the commercial premises. Both valuation approaches are supported by sales evidence.
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 38-325
A New Tax System (Goods and Services Tax) Act 1999 section 40-65