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Edited version of your written advice
Authorisation Number: 1051180536675
Date of advice: 13 January 2017
Ruling
Subject: Sale of taxable supplies
Question
Are you making a taxable supply when you sell your commercial property?
Answer
No
Relevant facts and circumstances
The entity (you) is not registered for GST.
You own a commercial property (the Property).
You carry on an enterprise of leasing the Property.
You do not carry on any other enterprise.
Your GST turnover from all sources is less than $75,000.
You have entered into a contract to sell the Property.
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
A New Tax System (Goods and Services Tax) Act 1999 section 188-10
A New Tax System (Goods and Services Tax) Act 1999 section 188-25
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 9-5 provides 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 for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
The issue in this case is whether you are required to be registered for GST as you are currently not registered.
Section 23-5 provides that you are required to be registered for GST if your turnover meets the registration turnover threshold (currently $75,000).
Section 188-10 provides that your turnover meets the registration turnover threshold if your current turnover is at or above $75,000 and the Commissioner is not satisfied that your projected GST turnover is below $75,000, or your projected GST turnover is at or above $75,000.
Section 188-25 excludes certain supplies when calculating your projected turnover. Such supplies include the transfer of a capital asset or any supply made or likely to be made by you as a consequence of ceasing to carry on an enterprise.
Paragraphs 31 to 36 of Goods and Services Tax Ruling GSTR 2001/7 Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover discuss the meaning of capital assets. In this instance, we consider the Property to be a capital asset and as such, the sale of the Property is excluded from the calculation of your projected turnover.
As your current turnover is below $75,000, and your projected turnover is also below $75,000 (as the sale of the Property is disregarded), you are not required to be registered for GST pursuant to section 23-5.
As you are neither registered nor required to be registered, you do not satisfy all the requirements for making a taxable supply. Therefore, the sale of the Property will not be a taxable supply.