Edited version of your written advice

Authorisation Number: 1013015195059

Date of advice; 13 May 2016

Ruling

Subject: GST and the sale of vacant land

Question 1

Is the sale of vacant land a taxable supply on which GST is payable?

Answer

Yes.

Question 2

Do the proposed works undertaken to the house constitute substantial renovations which results in the creation of 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)?

Answer

No.

Question 3

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

Answer

Yes.

Question 4

Is the sale of house and land an input taxed supply of residential premises on which no GST is payable?

Answer

Yes.

Question 5

Are you able to claim input tax credits for the GST component of expenses incurred in connection with the sale of the vacant land and the renovation works and the sale of the house and land?

Answer

You will be entitled to claim an input tax credit for any acquisitions you make in connection with the sale of the vacant land.

You will not be entitled to claim an input tax credit for any acquisitions you make in connection with the renovation works to the house and the sale of the house and land.

Where an acquisition relates to both the vacant land and the house and land you will be required to calculate the extent of the input tax credit to which you are entitled on a fair and reasonable basis.

Question 6

Will the profits from the sales of the vacant land and the house and land be assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

• You registered as a trust for GST to account on a cash basis with quarterly tax periods.

• You purchased a property, which consisted of two lots, as an investment and no stamp duty concessions were applied.

• One of the lots was vacant land and the other lot contained a residential premise

• You purchased the property with the intention of undertaking a quick renovation and resale that included largely cosmetic renovations.

• Your intention was to subdivide the property into the two lots and sell the vacant land lot and the house and land lot separately.

• Your intention was to sell the two properties within a six month period.

• You intend cancelling your GST registration once the sales of the two lots are completed.

• You have no intention of continuing to be a property development business as this property transaction was a one-off development you identified where you believed you could make a small profit with minimal risk in a short timeframe.

Reasons for decision

Question 1

Summary

The sale of the vacant land is a taxable supply on which GST is payable.

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 the indirect tax zone; 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)

All of the above requirements must be satisfied for a supply to be a taxable supply under section 9-5 of the GST Act.

In this case, you will satisfy paragraphs 9-5(a), 9-5(c) and 9(d) of the GST Act as you will make a supply for consideration, it is connected with the indirect tax zone (Australia) and you are registered for GST.

We will need to consider whether the supplies are made in the course or furtherance of an enterprise that you carry on.

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.

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 flavor and whether the nature of the asset changes to one of trade.

Application to your circumstances

You voluntarily registered for GST as a property development business just prior to entering into a residential contract to acquire the property as an investment and no stamp duty concessions were applied.

You purchased the property with the intention of a quick renovation and resale which included mainly cosmetic renovations and the separate titling of the two lots prior to selling them.

You estimated the timeframe for the renovation and proposed sale to be six months and you intend to cancel your GST registration once both of the sales have been completed.

You do not intend to continue your property development business as this property transaction was a one-off development you identified where you believed you could make a small profit with minimal risk in a short timeframe.

After taking into account the circumstances of your case and the events which are proposed to occur, we consider that the renovations to the property are not the mere realisation of capital assets.

You carried on the activities with a reasonable expectation of making a profit or gain. By undertaking the cosmetic works done to the property and separately titling the two lots you improved the property beyond just preparing it for sale. You brought the property into a more marketable condition which enables you to gain a better price and enhance the revenue from the sales.

Accordingly, your activities amount to an adventure or concern in the nature of trade. The sale of the two lots is the sale of trading assets 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 vacant land 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.

The sale of the vacant land is not the 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 vacant land 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 vacant land satisfies all of the requirements to be a taxable supply under section 9-5 of the GST Act. As such, the sale of the vacant land is a taxable supply on which GST is payable.

Question 2

Summary

The works undertaken to the house are not substantial renovations which will create new residential premises for the purposes of paragraph 40-75(1)(b) of the 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.

Paragraph 74 of GSTR 2003/3 provides that non-structural building work includes:

• replacing electrical wiring

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

• plastering or rendering an entire wall or walls

• plumbing, for example, replacing old metal pipes with copper pipes or plastic pipes

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

• removing or replacing air-conditioning or security systems.

Paragraphs 77 and 78 of GSTR 2003/3 discuss what is meant by the term 'cosmetic work'. These paragraphs state as follows:

77. As part of renovations, work is often undertaken which does not impact on the structure of the building but is more in the nature of renewing or refreshing what is already there. We consider work of this nature to be cosmetic. Cosmetic work by itself does not amount to substantial renovations. We consider cosmetic work includes:

• painting;

• sanding floors;

• removing and replacing worn or out of date fittings such as light fittings;

• replacing curtains or carpets.

78. Cosmetic work may be undertaken to obtain a better price when selling a property (sometimes referred to as a 'makeover') or to obtain a higher rent. While this is often referred to as a renovation, this is not what the legislation contemplates as 'substantial renovations'.

From the information you provided, the renovations undertaken would appear to be non-structural and/or cosmetic work.

We consider that the renovations will not affect the building as a whole and the non-structural renovations will not result in the removal or replacement of all or substantially all of the building.

Therefore, the works undertaken on the house are considered not to be substantial renovations which will create new residential premises for the purposes of paragraph 40-75(1)(b) of the GST Act.

Question 3

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 vacant land.

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 the purchaser acquired the property through a supply that was ineligible for the margin scheme. Subsection 75-5(3) of the GST Act details when a supply is ineligible for the margin.

In this case, you acquired the property from vendors who were not registered for the GST. The vendors purchased the property almost 30 years ago and occupied it as their main residence until you purchased the property for consideration. Therefore, you are eligible to apply the margin scheme to calculate the GST payable on the sale of the vacant land.

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 interest. That is, the margin is your sale price less the proportion of your original purchase price that relates to the vacant land. The margin scheme ensures that GST is payable only on the value added by your enterprise.

In this case the consideration you paid included both the vacant land and the house and land. As GST is only payable on the sale of the vacant land you will need to use a fair and reasonable basis for apportioning the purchase price between the two lots.

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 4

Summary

The sale of house and land is an input taxed supply of residential premises on which there is no GST payable.

Detailed reasoning

In Question 1 we determined that the sale of the vacant land satisfied all of the conditions of section 9-5 of the GST Act and was a taxable supply on which GST was payable.

Similarly, for the sale of house and land 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.

Paragraphs 32 to 37 of GSTR 2003/3 discuss changes in the size of land and whether subdivision of land, of itself, creates new residential premises. Paragraph 34 states:

34. Where land with a residential building has previously been sold as residential premises, or the subject of a long-term lease, and the area of land is reduced in size, we consider that a subsequent sale of the excised area of land is not a sale of new residential premises. The reduced land area and building, as a 'package', have previously been sold as residential premises, or been the subject of a long-term lease. It is necessary to consider whether a supply of the excised land is a taxable supply in its own right.

In selling the property to you the vendors were selling residential premises and therefore paragraph 40-75(1)(a) is not satisfied.

As established in Question 2, the renovations you undertook to the house did not constitute substantial renovations and therefore did not create new residential premises for the purposes of paragraph 40-75(1)(b) of the GST Act.

Paragraph 40-75(1)(c) is also not satisfied because the house had been the main residence of the vendors.

Therefore, as subsection 40-75(1) of the GST Act is not satisfied, section 40-65 of the GST Act prevails and the sale of the house and land will be an input taxed supply of residential premises. Section 9-5 of the GST Act states that a supply is not a taxable supply to the extent that it is GST-free or input taxed.

As a result, all of the conditions in section 9-5 of the GST Act are not satisfied. The sale of the house and land will be an input taxed supply on which no GST is payable.

Question 5

Summary

You will be entitled to claim an input tax credit for any acquisitions you make in connection with the sale of the vacant land.

You will not be entitled to claim an input tax credit for any acquisitions you make in connection with the renovations to the house and the sale of the house and land.

Where an acquisition relates to both lots, the vacant land and the house and land, you will be required to calculate the proportion of the input tax credit to which you are entitled on a fair and reasonable basis.

Detailed reasoning

The GST Act provides that a registered entity is entitled to input tax credits 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…

Vacant land

The acquisitions that you make solely in connection with the sale of the vacant land will be made in carrying on your isolated property development enterprise. Therefore these acquisitions will be made for a creditable purpose. As a result, provided the other elements of section 11-5 of the GST Act are satisfied, you will be entitled to claim input tax credits for these acquisitions.

House and land

The acquisitions that you make in connection with the renovations and the subsequent sale of the house and land will be made in carrying on your isolated property development enterprise. However, as decided in Question 2 above, the renovations to the house do not create new residential premises. Therefore, any supplies made in connection with this property can only be input taxed supplies of residential premises and any acquisitions you make in connection with these supplies will not be made for a creditable purpose. Hence, you will not be entitled to claim input tax credits for these acquisitions.

Apportionment

Where you make an acquisition in connection with both the vacant land and the house and land then you will need to calculate your entitlement to an input tax credit on a fair and reasonable basis. Goods and Services Tax Ruling GSTR 2006/4 provides guidance on how to determine the extent of creditable purpose for claiming input tax credits where you make acquisitions that are used partly to make input taxed supplies.

Question 6

Summary

The profits from the sales of the vacant land and the house and land will be assessable as ordinary income for the purposes of section 6-5 of the ITAA 1997 as an isolated business transaction.

Detailed reasoning

Profits from isolated transactions will be assessable as ordinary income where the intention or purpose in entering into the transaction was to make a profit or gain and the transaction was entered into and the profit was made in the course of carrying out a business operation or commercial transaction.

Case law has established that profits made by a taxpayer who enters into an isolated transaction with a profit making purpose can be assessable as ordinary income (FC of T v The Myer Emporium (1987) 163 CLR 199; 87 ATC 4363; (1987) 18 ATR 693).

Taxation Ruling TR 92/3 Income tax: whether profits on isolated transactions are income (TR 92/3) sets out the Commissioner's view of the general principles and factors that have been considered in determining whether an isolated transaction is of a revenue nature.

Paragraph 1 of TR 92/3, outlines that isolated transactions are:

• those transactions outside the ordinary course of business of a taxpayer carrying on a business, and

• those transactions entered into by non-business taxpayers.

The ruling outlines at paragraph 6 that whether a profit from an isolated transaction will be ordinary income will depend on the circumstances of the case, however a profit from an isolated transaction will be ordinary income when:

• the intention or purpose of a taxpayer in entering into the transaction was to make a profit or gain, and

• the transaction was entered into, and the profit was made, in the course of carrying on a business operation or commercial transaction.

TR 92/3 outlines that the relevant intention or purpose of the taxpayer, of making a profit or gain, is not the subjective intention or purpose of the taxpayer. Rather, it is the taxpayer's intention or purpose discerned from an objective consideration of the facts and circumstances of the case.

Paragraph 41 of TR 92/3 provides that the taxpayer must have the requisite purpose at the time of entering into the relevant transaction or operation. Further, that where the transaction involves the sale of property it is usually necessary that the taxpayer has the purpose of profit-making at the time of acquiring the property.

Whether a particular transaction has a business or commercial character depends very much on the circumstances of the case. Paragraph 13 of the ruling outlines the following factors which may be relevant when considering whether an isolated transaction amounts to a business operation or commercial transaction:

• the nature of the entity undertaking the operation or transaction

• the nature and scale of other activities undertaken by the taxpayer

• the amount of money involved in the operation or transaction and the magnitude of the profit sought or obtained

• the nature, scale and complexity of the operation or transaction

• the manner in which the operation or transaction was entered into or carried out

• the nature of any connection between the relevant taxpayer and any other party to the operation or transaction

• if the transaction involves the acquisition and disposal of property, the nature of the property, and

• the timing of the transaction or the various steps in the transaction.

The direction provided within TR 92/3 and in case law indicates that profits in this context are more likely to be considered ordinary income if they are made in the ordinary course of carrying on a business. Further, ordinary income may be derived from an isolated transaction which becomes commercial in nature, or as a result of profits on a transaction in which the initial intention was to make a profit on sale.

Application to your circumstances

You voluntarily registered for GST as a property development business and shortly after entered into a residential contract to purchase the property as an investment and no stamp duty concessions were applied.

You stated that you purchased the property with the intention of a quick renovation and resale which included the separate titling of the property into two lots prior to sale and cosmetic renovations to the house situated on one of the lots and the second lot which was vacant land.

You estimated the timeframe for the renovation and proposed sale to be six months and your intention is to cancel your GST registration once both of the sales have been completed.

You advised that you have no intention of continuing to be a property development business as this property transaction was a one-off development you identified where you believed you could make a small profit with minimal risk in a short timeframe.

We have determined that the profits from the sales of the vacant land and the house and land will be assessable as ordinary income for the purposes of section 6-5 of the ITAA1997.