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Edited version of your written advice
Authorisation Number: 1012759381790
Ruling
Subject: GST and sale of land
Question 1
Will the sale of the Property be a taxable supply?
Answer
The sale of the Property will not be a taxable supply.
From the information received, the proposed sale of the Property is a supply that will be made of the course or furtherance of an enterprise. The sale will also be characterised as the supply of a capital asset as the Property is held to derive income from the enterprise. Under section 188-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) the transfer of ownership of a capital asset is disregarded when working out projected GST turnover for registration purposes. No entity associated with the enterprise is registered for GST and as the proposed sale of the Property is excluded from the relevant turnover calculation, no entity is required to be registered for GST.
An entity that is not registered or required to be registered for GST cannot make a taxable supply, it follows that the supply of the Property will not be a taxable supply.
Relevant facts and circumstances
X purchased the Property in 19XX and has lived there with Y since then.
The partnership of X&Y have operated a business on the land from 1 July 200X, this business is still operating. The partnership was registered for GST between 1 July 200X and 31 December 20XX, its turnover is currently well below $75,000.
The Property is 100% owned by X, who has been given an offer to sell which will be accepted once there is confirmation that there is no GST obligations. The Property is not subject to a lease and has not had any further development on it, there will be no development carried out prior to the sale.
Apart from their involvement in the partnership, X does not operate any enterprise and is not registered for GST. X intends to sell the Property to property developers.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 7-1
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 23-5
A New Tax System (Goods and Services Tax) Act 1999 section 188-10
A New Tax System (Goods and Services Tax) Act 1999 section 188-15
A New Tax System (Goods and Services Tax) Act 1999 section 188-20
A New Tax System (Goods and Services Tax) Act 1999 section 188-25