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This edited version has been archived due to the length of time since original publication.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

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 written advice

Authorisation Number: 1012757779043

Ruling

Subject: GST liability on the sale of a property

Question

Is Entity X liable to pay the GST on the supply of the Property to Entity Y (the Purchaser)?

Answer

Yes. Entity X is liable to pay the GST on the taxable supply of the Property to the Purchaser.

Relevant facts and circumstances

Entity X carries on an enterprise and is registered for the GST.

Entity X (as Seller) and Entity Y (as Buyer) entered into a Contract for the sale by the Seller to the Buyer of the Property.

Entity X receives monetary consideration for the supply of the Property.

The Contract provides the terms in respect of the GST. Relevantly, it provides that:

    1) The Seller and Buyer acknowledge the Purchase Price does not include the Seller's liability (if any) for GST on the Supply of the Property. The Buyer must on the Settlement Date pay to the Seller in addition to the Purchase Price an amount equivalent to the amount (if any) payable by the Seller as GST on the Supply of the Property.

    2) The Seller must on the Settlement Date provide the Buyer with a tax invoice for the Supply.

    3) The Seller must not use the Margin Scheme for the purpose of calculating the GST on the Supply of the Property.

The Property is not a supply that would be GST-free or input taxed

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 9-5

Reasons for decision

Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) explains that for the purposes of determining liability for GST on taxable supplies 'You must pay the GST on any *taxable supply that you make'.

The requirements of a taxable supply are set out in section 9-5 of the GST Act which provides that you will 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 for GST; and

However the supply is not a taxable supply if it is an input taxed supply or a GST-free supply

In this case 'you' is referring to Entity X.

Based on the information provided, the supply by Entity X to the Purchaser of the Property is not input taxed or GST-free. Therefore as Entity X satisfies the requirements in (a) to (d) set out above Entity X will make a taxable supply.

The Settlement Document shows that the GST on sale in respect of the supply of the Property is an amount of $XXX,XXX. Accordingly Entity X will be liable for the GST of this amount in respect of its taxable supply of the Property.


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