Edited version of your written advice

Authorisation Number: 1012973373196

Date of advice: 29 February 2016

Ruling

Subject: GST registration

Question

Are X and Y required to be registered for GST in their capacity as court appointed trustees for the sale of property at a specified location?

Answer

No.

Relevant facts and circumstances

X and Y (You) were appointed by Orders of the Supreme Court of an Australian state as trustees of the property at a specified location (the Property) on statutory trust for sale pursuant to section 66G of the relevant Conveyancing Act.

X is registered for GST and carries on an enterprise of providing professional services.

Y is a Director of a corporate entity registered for GST that carries on an enterprise of providing professional services.

You will not be supplying any goods and services other than the Property in your capacity as trustees for the sale of the Property.

The Property comprises an area of approximately xx acres. The Property is zoned light industrial and has erected thereon an old residence, detached garage and detached shed.

The residence was built circa 19xx. The residence contains two/three bedrooms, one bathroom, kitchen, dining and living areas. The residence is a single level dwelling constructed of brick and tile.

Prior to the Property vesting in you as trustees, the Property was vested in A and B (the Executors) being appointed by the will of the late C (the Deceased).

The Executors, either individually or together, do not carry on or have never carried on an enterprise, hold or held an ABN or been registered for GST.

No income has been derived in relation to the Property since the date of death of the Deceased.

Following the death of C, A and B occupied the Property at separate times.

You have not carried on any business on the Property since the date of your appointment as trustees and no income has been received or is receivable by you.

The property has remained unoccupied since 20XX.

You are currently in the process of preparing the Property to be marketed for sale and will conduct activities including:

• retaining the services of expert property advisors and agents to advise you in relation to the best method of sale in an attempt to obtain the best price for the Property;

• obtaining necessary reports (such as environmental reports, survey reports, etc) normally or routinely obtained in relation to a proposed sale of property of this type;

• carrying out minor works on the Property such as slashing and clearing the Property, rubbish removal, etc.

The marketing of the Property for sale may be by auction, private treaty or expressions of interest.

You will hold the legal title to the Property and will be supplying the Property in accordance with your obligations (and rights) pursuant to 66G of the relevant Conveyancing Act and Orders of the Supreme Court of the Australian state.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 23-5

Section 9-20

Section 40-65

Section 188-10

Section 188-15

Section 188-20.

Reasons for decision

Note: In this reasoning, unless otherwise stated,

• all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

• reference material(s) referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au

Section 23-5 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 (currently $75,000 or $150,000 for non-profit bodies).

Enterprise

The term 'enterprise' is defined in section 9-20 and includes an activity or series of activities done in the form of a business.

The issue of whether trustees appointed by a Court pursuant to section 66G of the relevant Conveyancing Act are carrying on an enterprise was considered by White J in Toyama Pty Ltd v Landmark Building Developments Pty Ltd [2006] NSWSC 83 (Toyama).

In Toyama, White J at [67] noted that the trustees carried on an enterprise within the meaning of the GST Act, being a series of activities done in the form of a business and noted that the trustees were appointed by the Court because of their professional qualifications as solicitors.

White J continued at [68] noting that the 'enterprise which the trustees carried on was the series of activities required to be undertaken pursuant to their appointment as trustees for sale. The sale of the property, being the very thing they were appointed to do, was in furtherance of that enterprise.'

Furthermore, White J stated at [69] that the activity, or series of activities, which the trustees carried on was done in the form of business. The words "in the form of" have the effect of extending the meaning of enterprise beyond entities carrying on a business, to encompass activities that have the appearance or characteristics of business activities.

We consider that the circumstances on this issue in this case are similar to that in Toyama. As such we consider that you are carrying on an enterprise for the purpose of GST registration when carrying out duties in relation to your appointment as trustees pursuant to section 66G of the relevant Conveyancing Act.

GST turnover

Section 188-10 provides that your GST turnover will meet the GST registration threshold when:

(a) your current GST turnover is at or above the turnover threshold, and the Commissioner is not satisfied that your projected GST turnover is below the turnover threshold; or

(b) your projected GST turnover is at or below the turnover threshold.

The terms 'current turnover' and 'projected turnover' are defined in sections 188-15 and 188-20 respectively and both exclude input taxed supplies from the calculation of an entity's turnover.

Section 40-65 provides that the sale of real property in input taxed to the extent the property is residential premises to be used predominately for residential accommodation (other than new residential premises and commercial residential premises). Goods and Services Tax Ruling GSTR 2012/5 Goods and services tax: residential premises (GSTR 2012/5) outlines the characteristics of residential premises.

Paragraph 9 of GSTR 2012/5 explains that the requirement that 'the residential premises are to be used predominately for residential accommodation' in section 40-65 is to be interpreted as a single test that looks to the physical characteristics of the property to determine the premises' suitability and capability for residential accommodation. Paragraph 15 of GSTR 2012/5 continues by stating that to satisfy the definition of residential premises, premises must provide shelter and basic living facilities.

In this case, the Property contains a two/three bedroom house including kitchen, bathroom, dining and living areas. The Property is considered residential premises for GST purposes and is neither new residential nor commercial residential premises. The supply of the Property will be an input taxed supply and as such not taken into account when calculating turnover for GST registration purposes. Furthermore, you will not make any other supplies in your capacity as trustees other than the supply of the Property.

Conclusion

Whilst we consider that you are carrying on an enterprise when performing your duties as trustee for the sale of the Property, your GST turnover does not meet the registration turnover threshold of $75,000.

Consequently, you are not required to be registered for GST in your capacity as trustee for the sale of the Property.