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Edited version of your written advice
Authorisation Number: 1051357166292
Date of advice: 6 April 2018
Ruling
Subject: GST and the supply of residential premises together with the assignment of development consent.
Question
Is the supply of residential premises together with the assignment of development consent a taxable supply for GST purposes?
Answer
No, the entity is not making a separate taxable supply under section 9-5 of the GST Act under a contract of sale it assigns to the purchaser a development consent that runs with the residential premise. The entity is making a single input taxed supply of the residential premises. The sale of residential premises is an input taxed supply pursuant to section 40-65 of the GST Act.
Relevant facts and circumstances
Prior to the sale you had obtained development consent in relation to the residential premises. Under the contract of sale, you assigned that development consent to the buyer.
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 40-65
Reasons for decision
Section 9-5 of the GST Act sets out the requirements that must be satisfied for a supply to be a taxable supply and a supply is not a taxable supply when it is an input taxed supply.
Before determining whether a taxable supply is being made in relation to the development consent, the substance of the supply or supplies must be established. That is, in relation to the formal assignment of the development consent, it must be determined whether the entity is making a separate supply from its input taxed supply of residential premises.
The development consent is attached to the land belonging to the residential premises and runs with that land. Upon sale of the residential premises, the development consent is automatically transferred to the purchaser as a natural consequence of the sale. This transfer takes place regardless of the formal assignment in the sale contract. Your assignment of the development consent does not result in anything being transferred to the purchaser that would result naturally from the transfer of the land itself.
Therefore, you are not supplying the purchaser with anything more than residential premises. The formal assignment of the development consent does not amount to a separate supply because it does not affect the transfer of anything that was not already transferred to the purchaser as a direct and natural consequence of the sale of the residential premises.
As such, you are not making a separate taxable supply under section 9-5 of the GST Act when it assigns to the purchaser, under the contract, a development consent that runs with the residential premises. You are making a single input taxed supply of the residential premises, which includes the development consent.