| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1013019965579
Date of advice: 20 May 2016
Ruling
Subject: Australian business number (ABN) and goods and services tax (GST) registration
Question 1
Are you required to register for GST, if you choose to move into your parents' home and rent out your own house?
Answer
No.
Under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) an entity is required to be registered for GST if:
(a) it is carrying on an enterprise; and
(b) its GST turnover is $75,000 or more.
However, there are some exceptions to the above general rule. For example, for taxi drivers, including chauffeur driven limousines and hire cars, there is no registration turnover threshold. This means that anyone who carries on an enterprise of driving a taxi, chauffeur driven limousine or hire car, must register for GST irrespective of their turnover (section 144-5 of the GST Act).
You advised that you intend to rent your own house. You are no longer driving a taxi and are not carrying on any other enterprise.
When you rent your home you will be carrying on a leasing enterprise. However because the supply of residential premises by way of rent is input taxed, the rental is not included in the calculation of your GST turnover. Therefore, you are not required to register for GST.
Although currently you are not required to be registered for GST, you may choose to register as renting out a property is considered carrying on an enterprise. However, even if you do register for GST you should not include GST in the rental charges because renting out residential premises is input taxed. You also cannot claim GST credits for the GST included in any costs relating to the rental, such as agent's commission or repairs and maintenance on the premises.
Please note that if you recommence your enterprise of supplying taxi travel, then you must register for GST irrespective of your turnover. Also, if you commence carrying on another enterprise you may become required to be registered for GST.
Question 2
Are you required to register for an ABN if you choose to move into your parents' home and rent out your new house?
Answer
No.
As you are carrying on an enterprise, you can register for an ABN but there is no compulsion to do so.
Furthermore, as the supply of your residential premises is an input taxed supply you will not need to quote an ABN to your tenants as your tenants will not be required to withhold tax from the rental payments.
For more information please refer to Goods and Services Tax Determination GSTD 2000/9 Goods and services tax: if you let out residential premises do you need to get an ABN for PAYG purposes or register for GST?, which is available on our website at ato.gov.au
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 own your own house.
You plan to move in with your parents and rent out your house to residential tenants.
You are not carrying on any other enterprise.
Your only other income is your interest income totalling approximately $XX a month.
You have ceased being a taxi driver.
You have cancelled your ABN and GST registrations.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 23-5
A New Tax System (Goods and Services Tax) Act 1999 section 40-35
A New Tax System (Goods and Services Tax) Act 1999 section 144-5
A New Tax System (Australian Business Number) Act 1999 section 8