Edited version of your written advice

Authorisation Number: 1012793417646

Ruling

Subject: GST and new residential premises

Question 1

Do the proposed works undertaken to the house constitute substantial renovations which results in the creation of new residential premises of paragraph 40-75(1)(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

The proposed works to the house are substantial renovations which will create new residential premises for the purposes of paragraph 40-75(1)(b) of the GST Act.

Question 2

Is the sale of the property a taxable supply of new residential premises that have been created through substantial renovations?

Answer

The sale of the property is a taxable supply of new residential premise that have been created through substantial renovations.

Question 3

Are we able to claim input tax credits for the GST component of expenses incurred in connection with the renovations?

Answer

You will be entitled to claim input tax credits for any expenses that you incurred in connection with the renovations under section 11-20 of the GST Act.

Question 4

Can the margin scheme be used to calculate the GST payable on the sale?

Answer

You can apply the margin scheme under subsection 75-5(1) of the GST Act to calculate the GST payable on the sale of the property.

Question 5

What valuation date is used to calculate the value for the purposes of the margin scheme under subsection 75-10(3) of the GST Act.

Answer

The correct date for a valuation of the property under subsection 75-10(3) of the GST Act will be the earlier of the date of effect of your registration or the date of your application for registration.

Relevant facts and circumstances

You are not registered for GST.

• You acquired the residential property prior to 1 July 2000

• The property is zoned residential.

• You intend to carry out works to the house to make it more marketable and appealing to prospective purchasers.

• Once the works are complete, the property will be sold for consideration for an amount greater than $75,000.

• The proposed works will involve a large sum of funds which is to be financed externally by bank borrowings.

• Currently the property consists of ground level and first level.

• The renovation will consist of various structural, non-structural and cosmetic works which will include all of the following:-

• Extension of some rooms

• Creating new rooms within the existing space

• Rebuilding some rooms

• New internal staircase

• Building a new roof deck

• Building a new sun deck and swimming pool

• Cosmetic changes to existing rooms

• Building new support steel beams and columns

• New foundations and strengthening

• Replacing electrical wiring

• New plastering/carpets/curtains and replace windows

• New external cladding/rendering

• New roofing

• New kitchen/bathroom

• Replace existing timber flooring

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 11-5

A New Tax System (Goods and Services Tax) Act 1999, section 11-15

A New Tax System (Goods and Services Tax) Act 1999, section 11-20

A New Tax System (Goods and Services Tax) Act 1999, section 23-5

A New Tax System (Goods and Services Tax) Act 1999, section 40-65

A New Tax System (Goods and Services Tax) Act 1999, subsection 40-75(1)

A New Tax System (Goods and Services Tax) Act 1999, section 75-5

A New Tax System (Goods and Services Tax) Act 1999, section 75-10

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

A New Tax System (Goods and Services Tax) Act 1999, section 195-1

Reasons for decision

Question 1

Summary

The proposed works to the house are substantial renovations which will create new residential premises for the purposes of paragraph 40-75(1)(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Detailed reasoning

Paragraph 40-75(1)(b) of the GST Act provides that new residential premises may be created through substantial renovations of a building.

New residential premises are created through substantial renovations when an owner of residential premises does work to it that satisfies the definition of 'substantial renovations' in section 195-1 of the GST Act.

Section 195-1 states:

Substantial renovations of a building are renovations in which all, or substantially all, of a building is removed or is replaced. However, the renovations need not involve removal or replacement of foundations, external walls, interior supporting walls, floors, roof or staircases.

Goods and Services Tax Ruling GSTR 2003/3: Goods and services tax: when is a sale of real property a sale of new residential premises? (GSTR 2003/3) provides guidelines on when the sale of real property is the sale of new residential premises. It considers substantial renovations in paragraphs 53 to 87.

As stated in paragraphs 56 and 57 of GSTR 2003/3, the terms 'building' or 'renovate' are not defined in the GST Act. Therefore these terms take on their ordinary meaning.

56. … 'Building' means 'a substantial structure with a roof and walls, as a shed, house, department store etc'…^.

57. The general usage of the term 'renovate' is 'to make new or as if new again; restore to good condition; repair; to reinvigorate; refresh; revive'…

Paragraph 66 of GSTR 2003/3 states that work which is not directly attributable to a building, for example, landscaping of surrounding land or replacement of a boundary fence, is excluded because it is not work to a building.

Paragraph 61 of GSTR 2003/3 explains that for the work to constitute substantial renovations, it must satisfy the following criteria:

i. the renovations need to affect the building as a whole; and

ii. the renovations need to result in a removal or replacement of all or substantially all of the building.

Paragraph 64 of GSTR 2003/3 states:

Whether substantial renovations have occurred should be based on consideration of the building in its entirety, that is the building as a whole, and not by reference to specific or individual rooms in the building. For renovations to be substantial they must directly affect most rooms in a building. The renovation of only one part of a building, without any work on the remaining parts of the building, would not constitute substantial renovations.

Paragraphs 68 to 79 of GSTR 2003/3 provide guidelines in relation to the question of whether all or substantially all of a building is removed or replaced.

68. The extent to which parts of a building are removed or replaced will determine whether the above criterion is satisfied. The definition of substantial renovations states that it is not necessary for foundations, external walls, interior supporting walls, floors, roof or staircases to be removed or replaced for renovations to be substantial

69. This criterion is satisfied where there is a removal or replacement of a substantial part of the:

• structural components of the building; or

• non-structural components of the building.

70. Structural work may give rise to substantial renovations in its own right. Structural work includes such work as:

• altering, or replacing of, foundations;

• replacing, removing or altering of floors or supporting walls, or parts thereof (interior or exterior);

• lifting or modifying of roofs;

• replacing existing windows and doors such that it is necessary to alter brickwork (for example, replacing a single door with a double sliding door).

71. Structural work is also undertaken in the course of building an extension to a house or adding new bedrooms to a house.

72. Where a substantial part of the structural components of a building is removed or replaced this will often mean that a substantial part of the non-structural components is also removed or replaced.

73. However, substantial renovations may also occur where a substantial part of the non-structural components is removed or replaced but the structural components are not substantially affected. For example, in a unit, it is not essential that both components are substantially removed or replaced for substantial renovations to have occurred.

74. Non-structural building work includes:

• replacing electrical wiring;

• replacing, removing or altering non-supporting walls, or parts thereof (interior or exterior);

• plastering or rendering an entire wall or walls;

• plumbing (eg replacing old metal pipes with copper pipes or plastic pipes);

• removing or replacing kitchen cupboards, bathroom fixtures, etc;

• removing or replacing air-conditioning or security systems.

From the information provided, the renovations will consist of both structure and non-restructure work. Your structural work includes:

• New foundations and strengthening;

• Creating new rooms within the existing space;

• New internal staircase;

• New roofing;

• Building new support steel beams and columns;

• Extension of some rooms; and

• Rebuilding some rooms.

Your non-structural work includes:

• Replacing electrical wiring;

• New plastering and replace windows;

• New external cladding/rendering;

• New kitchen/bathroom; and

• Replace existing timber flooring.

Based on the information that you have provided, we consider that the renovations will affect the building as a whole and the non structural renovations will result in the removal or replacement of all or substantially all of the building.

This conclusion is further supported by the structural work that you are also carrying out, including new foundations, as well as modifications to the roofing and staircases.

On the basis that all or substantially all of the building will be removed or replaced, the renovations satisfy the definition of substantial renovations as defined in section 195-1 of the GST Act.

Of note are paragraphs 77 to 79 of GSTR 2003/3, which explain that cosmetic work does not amount to substantial renovations. However, where the structural and non-structural work amounts to substantial renovations that create new residential premises, all of the cosmetic work to be undertaken will form part of the new residential premises. Cosmetic work includes painting, sanding floors, removing and replacing worn out light fittings or replacing curtains and carpets

Therefore, the proposed works to the house are considered substantial renovations which will create new residential premises for the purposes of paragraph 40-75(1)(b) of the GST Act.

Question 2

Summary

The sale of the property is a taxable supply of new residential premise that have been created through substantial renovations.

Detailed reasoning

Subsection 7-1(1) of the GST Act states that GST is payable on taxable supplies and taxable importations.

Section 9-5 of the GST Act 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)

For the supply of your new residential property to be a taxable supply, all of the requirements listed in section 9-5 of the GST Act must be satisfied.

New residential premises

Section 40-65 of the GST Act provides that the sale of real property (residential premises) is input taxed. However, the sale of residential premises is not input taxed to the extent that the residential premises are new residential premises.

The term 'new residential premises' is defined under subsection 40-75(1) of the GST Act, and provides that residential premises are new residential premises if they:

(a) have not previously been sold as residential premises (other than commercial residential premises) and have not previously been the subject of a long term lease or

(b) have been created through substantial renovations of a building or

(c) have been built, or contain a building that has been built, to replace demolished premises on the same land.

From the facts provided the sale of your new residential property will be for consideration and the supply is connected with Australia. Therefore, the requirements listed in paragraphs 9-5(a) and 9-5(c) of the GST Act are satisfied.

As such, what remains to be considered is whether the sale of your new residential property is made in the course or furtherance of an enterprise that you carry on (paragraph 9-5(b) of the GST Act) and whether you are required to be registered for GST (paragraph 9-5(d) of the GST Act).

Enterprise

Subsection 9-20(1) of the GST Act states:

An enterprise is an activity, or series of activities, done:

(a) in the form of a business; or

(b) in the form of an adventure or concern in the nature of trade; or…

The Tax Office view on what constitutes an enterprise is contained in Miscellaneous Taxation Ruling 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number (MT 2006/1).

Goods and Services Tax Determination GSTD 2006/6 Goods and services tax: does MT 2006/1 have equal application to the meaning of 'entity' and 'enterprise' for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (GSTD 2006/6) provides that the principles contained in MT 2006/1 apply equally to the terms entity and enterprise as used in the GST Act and can be relied on for GST purposes.

Paragraph 159 of MT 2006/1 explains that whether or not an activity constitutes an enterprise is a question of fact and degree depending on the circumstances of each individual case.

Paragraph 234 of MT 2006/1 provides that ordinarily, the term 'business' would encompass trade engaged in, on a regular or continuous basis. However, an enterprise can incorporate a single undertaking such as the acquisition, development and sale of real property.

Paragraph 244 of MT 2006/1 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.

You informed that the property in question was and has always been used as a holiday house. The property was never leased or tenanted. You intend to carry out substantial works to the house to make it more marketable and appealing to prospective purchasers.

We consider that you are not carrying on a property development business as you do not seem to be engaged in developing properties on a regular or continuous basis. However, it remains to be considered whether your property development activities amount to an isolated transaction that is an enterprise in the form of an adventure or concern in the nature of trade.

As adventures or concerns in the nature of trade involve trade, it is necessary to consider the meaning of trade.

Paragraph 252 of MT 2006/1 states that improving a property beyond preparing an asset for sale, to bring it into a more marketable condition and gain a better price suggests an element of trade.

Paragraphs 262 to 302 of MT 2006/1 deal with isolated transaction and sales of real property. The ruling provides that often the question of whether an entity is carrying on an enterprise arises where there is a one-off activity or isolated real property transaction. The issue to be decided in such cases is whether the one-off activity is of a revenue nature (an enterprise) or a mere realisation of a capital asset.

Paragraph 265 of MT 2006/1 provides guidance for determining whether activities involving the sale of real estate are a business or an adventure or concern in the nature of trade as opposed to a mere realisation of a capital asset. It states:

265. From the Statham and Casimaty cases a list of factors can be ascertained that provide assistance in determining whether activities are a business or an adventure or concern in the nature of trade (a profit-making undertaking or scheme being the Australian equivalent, see paragraphs 233 to 242 of this Ruling). If several of these factors are present it may be an indication that a business or an adventure or concern in the nature of trade is being carried on. These factors are as follows:

• there is a change of purpose for which the land is held;

• additional land is acquired to be added to the original parcel of land;

• the parcel of land is brought into account as a business asset;

• there is a coherent plan for the subdivision of the land;

• there is a business organisation for example a manager, office and letterhead;

• borrowed funds financed the acquisition or subdivision;

• interest on money borrowed to defray subdivisional costs was claimed as a business expense;

• there is a level of development of the land beyond that necessary to secure council approval for the subdivision; and

• buildings have been erected on the land.

MT 2006/1 also provides that in determining whether activities relating to an isolated transaction are an enterprise or are the mere realisation of a capital asset, it is necessary to examine the facts and circumstances of the particular case. In addition to the factors outlined above, there may be other relevant factors that need to be considered in reaching an overall conclusion. No single factor will be determinative rather it will be a combination of factors that will lead to a conclusion as to the character of the activities.

As stated earlier, a trading asset is generally dealt with or traded within a short time after acquisition. However, assets purchased with the intention of holding them for a reasonable period of time, to be held as income producing assets or to be held for the pleasure or enjoyment of the person, are more likely not to be purchased for trading purposes.

It is important to note that the nature of an asset can change from being a private or capital asset to that of trade and vice versa. Where a property that was not acquired for resale at a profit later becomes the subject of substantial renovations for sale, it is necessary to consider if the activities have a commercial flavour and whether the nature of the asset changes to one of trade.

After taking into account the circumstances of your case and the events which are proposed to occur, we consider that the proposed substantial renovations and the sale of the property is more than a mere realisation of a capital asset.

You carried on the activities with a reasonable expectation of making a profit or gain. By the various structural, non-structural and cosmetic works done to the property, you improved the property beyond preparing it for sale. You brought the land into a more marketable condition which enables you to gain a better price and enhance the revenue from the sale. You borrowed a substantial amount of money to undertake the proposed works.

Although your original intention of the property was a holiday house, the steps that you took indicate that your intention changed when you decided to renovate to sell. Therefore, there was a change of purposes for which the property was held. Your activities changed the character of your property into a trading asset as your activities have the characteristics and appearance of a commercial deal and are of a kind undertaken by property developers.

Accordingly, your activities amount to an adventure or concern in the nature of trade. The sale of the new residential premises is a sale of a trading asset made in the course or furtherance of an isolated property development enterprise pursuant to paragraph 9-20(1)(b) of the GST Act.

Consequently, the sale of the new residential premises satisfies the condition in paragraph 9-5(b) of the GST Act, as it is a supply made in the course or furtherance of an enterprise that you carry on.

Registered or required to be registered for GST

Section 23-5 of the GST Act provides that you are required to be registered for GST if you:

(a) are carrying on an enterprise; and

(b) you meet the registration turnover threshold.

As determined above, you are carrying on an isolated property development enterprise. Hence, you satisfy the requirement in paragraph 23-5(a) of the GST Act.

The next step is to determine whether your GST turnover meets the registration turnover threshold, which in your case is $75,000.

In accordance with subsection 188-10(1) of the GST Act, your GST turnover meets the registration turnover threshold if your current GST turnover is $75,000 or more, and the Commissioner is not satisfied that your projected GST turnover is less than $75,000.

Your current GST turnover at a time during a particular month is the sum of the values of all the supplies that you have made, or are likely to make, during the 12 months ending at the end of that month.

Your projected GST turnover at a time during a particular month is the sum of the values of all the supplies that you have made, or are likely to make, during that month and the next 11 months.

However, certain categories of supplies are excluded from the calculation of the current and projected GST turnovers. Relevant to your case are supplies that are made or likely to be made by you solely as a consequence of ceasing to carry on an enterprise (subsection 188-25(b) of the GST Act).

Paragraph 46 and 47 of GSTR 2001/7 Goods and services tax; meaning of GST turnover, including the effect of section 188-25 on projected GST turnover provides guidance on the effect of an isolated transaction, they state:

Isolated Transactions

46. An enterprise may consist of an isolated transaction or dealing with a single asset. For example, an enterprise may consist solely of the acquisition and refurbishment of a suburban shop for resale at a profit. Where an entity engages in acquiring a single asset for resale at a profit, the activity will be an enterprise under paragraph 9-20(1)(b), because it is an activity in the form of an adventure in the nature of trade. As discussed in paragraph 35 of this Ruling, the disposal of that single asset is not the transfer of a capital asset. Consequently, that supply is not excluded from your projected GST turnover.

47. The disposal of that single asset, or the completion of that isolated transaction, is also not a transfer solely as a consequence of ceasing to carry on an enterprise. In such circumstances the enterprise ceases as a consequence of the disposal of the single asset, rather than the single asset being disposed of in consequence of the ceasing to carry on the enterprise.

As explained earlier, the substantial renovations to the property is more than a mere realisation of a capital asset. Hence, the sale of the property is a sale of a trading asset of your isolated property development enterprise. Consequently it does not fall under subsection 188-25(b) of the GST Act.

Furthermore, for the reasons explained in paragraphs 46 and 47 of GSTR 2001/7, the sale of the property is not made as a consequence of ceasing to carry on an enterprise under subsection 188-25(b) of the GST Act.

Accordingly, the sale of the property is not disregarded when calculating your projected GST turnover under section 188-25 of the GST Act. As the sale price of the property is likely to be more than $75,000, you satisfy the requirement in paragraph 23-5(b) of the GST Act.

You are therefore required to be registered for GST as you meet all the requirements of section 23-5 of the GST Act.

Your sale of the property will meet all of the requirements for a taxable supply under section 9-5 of the GST Act. As such, the sale of the property is a taxable supply of new residential premise that have been created through substantial renovations.

Question 3

Summary

You will be entitled to an input tax credit for any expenses that you incurred in connection with the renovations under section 11-20 of the GST Act.

Detailed reasoning

The GST Act provides that a registered entity is entitled to input tax credits (ITCs) for creditable acquisitions.

Under section 11-20 of the GST Act, you are entitled to an input tax credit for any creditable acquisition that you make.

Under section 11-5 of the GST Act,

You make a creditable acquisition if:

(a) you acquire anything solely or partly for a creditable purpose; and

(b) the supply of the thing to you is a taxable supply; and

(c) you provide, or are liable to provide, consideration for the supply; and

(d) you are registered, or required to be registered.

Section 11-15 of the GST Act defines creditable purpose:

1) You acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise.

2) However, you do not acquire the thing for a creditable purpose to the extent that:

(a) the acquisition relates to making supplies that would be input taxed; or

(b) the acquisition is of a private or domestic nature…

In this case, the acquisition of the expenses that you will incur in connection with the renovations will be acquired in carrying on your isolated property development enterprise. It does not relate to supplies that would be input taxed and is not of a private or domestic nature.

Therefore, the acquisition of the expenses will be for a creditable purpose. As the supply to you will be a taxable supply and you will be providing consideration for the supply, you will be able to claim an input tax credit for the supply provided that you are registered for GST at the time of the acquisition of the expenses.

As you are not registered for GST, you will not be entitled to claim input tax credits prior to your effective GST registration date.

When you are registered for GST, you will be entitled to claim input tax credits on the GST included in the acquisitions made in connection with the expenses incurred in the substantial renovation of the new residential premises. You must ensure, however, that you backdate the GST registration date prior to the date of making the acquisitions.

Therefore, you may claim input tax credits for the GST component of expenses incurred in connection with the renovation of the property under section 11-20 of the GST Act, provided that you are registered for GST.

Question 4

Summary

You can apply the margin scheme under subsection 75-5(1) of the GST Act to calculate the GST payable on the sale of the property.

Detailed reasoning

According to subsection 75-5(1) of the GST Act:

1) The margin scheme applies in working out the amount of GST on a taxable supply of real property that you make by:

(a) selling a freehold interest in land; or

(b) selling a stratum unit; or

(c) granting or selling a long-term lease;

If you and the recipient of the supply have agreed in writing that the margin scheme is to apply.

The margin scheme cannot be used if a purchase of property is acquired through a taxable supply where GST was calculated without using the margin scheme according to subsection 75-5(2) of the GST Act.

Where you are registered for GST and you make a supply of a freehold interest in land, the supply is subject to GST. Subsection 75-10(1) of the GST Act stipulates that you calculate GST on the supply as 1/11^th of the margin.

Subsection 75-10(2) provides that the margin for the supply is the amount by which the consideration for the supply exceeds the consideration for your acquisition of the interests. That is, the margin is your sale price (including GST) less your original purchase price. You should not include the cost of any improvements to the land made on or after 1 July 2000 when you work out the original purchase price.

The margin scheme ensures that GST is payable only on the value added by your enterprise.

Furthermore, paragraph 15 of Goods and Services Tax Ruling GSTR 2000/21 Goods and services tax: the margin scheme for supplies of real property held prior to 1 July 2000 (GSTR 2000/21) states:

15. You can only apply the margin scheme if the supply is a taxable supply. If the supply is new residential premises then the first supply will be a taxable supply to which the margin scheme can apply but subsequent sales of the property as residential premises will be input taxed under Subdivision 40-C. Subsequent sales of vacant residential land will be a taxable supply if sold by a supplier who is registered or required to be registered for GST.

To be eligible to use the margin scheme, the property you acquired cannot be supplied to you as a taxable supply.

In this case, you acquired the property prior to 1 July 2000, before the inception of GST.

You may be eligible to apply the margin scheme relating to the first supply of the new residential property as subsequent sales of the property will be input taxed.

Therefore, you can apply the margin scheme under subsection 75-5(1) of the GST Act to calculate the GST payable on the sale of the property.

If you apply the margin scheme to your sale, you and the purchaser must agree in writing to apply the margin scheme before or at the time of making the supply

Question 5

Summary

The correct date for a valuation of the property under subsection 75-10(3) of the GST Act will be the earlier of the date of effect of your registration or the date of your application for registration,

Detailed reasoning

The correct date for a valuation of property is set out in the table in subsection 75-10(3) of the GST Act. Paragraph 17 of GSTR 2000/21 in conjunction with the addendum to paragraph 17 contained in GSTR 2000/21A- Addendum, discusses the table as follows:

17. If you choose to apply the margin scheme, and to calculate the margin for the supply under subsection 75-10(3), then you will be required to obtain a valuation. The table below sets out the particular circumstances and the date on which a valuation is required:

Item	When valuations may be used	Valuation date
1	You acquired the freehold interest, stratum unit or long-term lease before 1 July 2000 and Items 2, 3, and 4 do not apply.	1 July 2000
2	You acquired the freehold interest, stratum unit or long-term lease before 1 July 2000 but you were not registered or required to be registered until after 1 July 2000.	The earlier of the date of effect of your registration or the date of your application for registration
2A	You acquired the freehold interest, stratum unit or long-term lease on or after 1 July 2000, but the supply to you: (a) was GST-free under subsection 38-445(1A); and (b) related to a supply before 1 July 2000, by way of a lease, that would have been GST-free under section 38-450 had it been made on or after 1 July 2000.	1 July 2000
3	You were registered or required to be registered and held the freehold interest, stratum unit or long-term lease since before 1 July 2000, and there were improvements on the land or premises as at 1 July 2000.	1 July 2000
4	The supplier is the Commonwealth, State, or Territory and has held the freehold interest, stratum unit or long-term lease since before 1 July 2000 and there were no improvements on the land or premises as at 1 July 2000.	The day on which the taxable supply takes place

Note:

(a) a valuation must be made for the date specified in column 3 of the table; and

(b) the valuation must comply with all requirements determined in writing by the Commissioner.

As shown in the table above, item 2 will apply to determine the valuation date as you acquired the property before 1 July 2000 and you were not registered or required to be registered until after 1 July 2000.

As such, the valuation date will be the earlier of the date of effect of your registration or the date of your application for registration.