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This edited version has been archived due to the length of time since original publication.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: 1012770800994

Ruling

Subject: GST and sale of property

Question 1

Was your sale of the property a taxable supply?

Answer

No

Question 2

If the answer to question 1 is yes, was the supply eligible for the margin scheme?

Answer

Not necessary to answer.

Relevant facts and circumstances

You, Mr and Mrs X, jointly purchased two adjoining properties in Victoria in yyyy. The properties were:-

    • Property 1 - one large block with the shed. The shed is xx years old.

    • Property 2 - a strip of land fronting the street

The margin scheme was not applied to the supply of the property to you.

Mr X used the shed on Property 1 as a workshop for his business. You also used it for storage.

Property 1 was registered for GST at the time of purchase and at the time of sale.

The partnership of Mr and Mrs X has never been registered for GST.

In mmyyyy, you decided to make some improvements to Property 1, with a view to eventually renting the property as short-term holiday rental. Plans were approved on ddmmyyyy which allowed you to:

    • add internal walls to create bedrooms and a bathroom

    • add a kitchen/dining room and lounge room

The project was completed around mmyyyy at a cost of about $xx.

The garage/storage area was unchanged during this time and Mr X continued to use this area for his business.

You bought furniture and tried to rent the converted shed as short term holiday rental. However, this was not successful.

You then decided to sub-divide Property 1 with a view to selling the shed/residence on a smaller land area. The cost of the sub-division was about $x.

The new title comprising the shed/residence was listed for sale and was sold in mmyyyy.

You continue to hold the balance of the vacant land from Property 1 and Property 2.

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 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 188-25