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Edited version of your written advice
Authorisation Number: 1012914982800
Date of advice: 20 November 2015
Ruling
Subject: GST and sale of property
Question
Is GST applicable to your sale of the Property?
Answer
No, given the facts in this case, including the minimal level of treatment of expenses related to the Property being recorded in the books of the Business and use of the Property for Business purposes, we do not consider that the sale of the Property is in the course or furtherance of an enterprise that you carry on. We do not consider that there is sufficient connection between the sale of the Property and the carrying on of your enterprise.
Relevant facts and circumstances
A and B (You) are registered for GST for the purpose of carrying on an enterprise of operating a prawn trawling business (the Business).
You own property at a specified location (the Property).
You purchased the Property in 200X as joint tenants. The purchase price did not include GST and as such no GST credits were claimed in relation to the purchase of the Property.
The Property is approximately 30 acres.
During a period of approximately four years (and ceasing a number of years ago) you charged an amount each week including GST to another person to keep their vessel parked on the Property. The transaction was invoiced through the Business.
You currently use the Property to store various items used in the Business. A disused stable is used to store items. There is also an old Pantech truck on the Property used to store some pumps and parts, tools and personal effects. You also keep some tools (e.g. drills, grinder, welder, etc.) in a trailer parked on the Property.
The Property has not been used for any other income producing activities.
The Property is used as your principal place of residence, including the running of a number of animals you keep for recreational purposes.
The purchase of the Property was financed through an individual bank loan. Interest on the loan has not been claimed in the accounts of the Business.
Land and water rates for the Property were not claimed as expenses in the accounts of the Business.
The only GST credits claimed by the Business in regard to the Property was in regard to apportioning of the electricity bill used for running freezers and use of welding/power tools to carry out repairs to the vessel.
The Property was not recorded in the financial statements of the Business as being an asset of the Business.
You entered into a contract for the sale of the Property in 20XX.
The sale contract provides for the following Special Conditions:
• The Contract is conditional upon the Buyer conducting any due diligence investigations it considers appropriate in order to satisfy itself in all respects with any and all aspects of the Property ('Due Diligence').
• The contract is made conditional upon the Buyer receiving a Development Permit by the Approval Date on terms and conditions entirely satisfactory to the Buyer in all respects.
• The seller acknowledges that the application for the Development Permit may be made in the Buyer's name and the Seller consents to the Buyer lodging the development application (DA).
Neither A nor B is registered for GST in their own right.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Section 9-5
Paragraph 9-5(b)
Section 9-40