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Edited version of your written advice
Authorisation Number: 1012867366532
Date of advice: 31 August 2015
Ruling
Subject: GST on sale of property
Question
Will the sale of the property situated in Australia (the property) be subject to goods and services tax (GST)?
Answer
No.
Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), 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.
Section 23-5 of the GST Act provides that you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold (of $75,000 for a business or $150,000 for non-profit). In working out your projected GST turnover, paragraph 188-25(a) of the GST Act requires that you disregard any supply made or are likely to be made, by you by way of transfer of ownership of a capital asset of yours.
Based on the information provided, you are not registered for GST and the sale of the property would be excluded from the calculation of your GST turnover because it will be a transfer of a capital asset. Therefore, as you are neither registered nor required to be registered for GST, your sale of the property does not satisfy all the requirements of a taxable supply under section 9-5 of the GST Act and is not subject to GST.
Relevant facts and circumstances
Mr and Ms X are selling their main residence situated in Australia. It is located on acreage land where part of the land is leased to a farming business.
Mr and Ms X are not registered for GST.
As the turnover for the last financial year was under $75000 from the leasing fee they are not required to be registered for GST.
The land occupied by the business is approximately 40-45% of the total land.
The property is on one title and houses the main residence of Mr and Ms X.
It is not known at this stage what the intention of the future buyers of the property will be.
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 23-5 and
A New Tax System (Goods and Services Tax) Act 1999 Section 188-25.