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Edited version of your written advice
Authorisation Number: 1051493632151
Date of advice: 14 March 2019
Ruling
Subject: GST and sale of real property
Question
Is the entity liable to pay GST on the sale of the Property when it is sold this year?
Answer
No.
Relevant facts and circumstances
● The entity is currently not registered for the goods and services tax (GST).
● The entity owns real Property which consists of land and a house.
● The Property is in Australia.
● The entity has allowed entity X to occupy and use the land for no consideration and has previously rented out the house to entity Y.
● The entity intends to sell the Property, as is, without any tenancies in place.
● The entity will not be subdividing or undertaking a development on the land prior to sale.
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 188-25
Reasons for decision
GST is payable on taxable supplies.
You make a taxable supply if you meet the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which 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 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)
GST registration
Section 23-5 of the GST Act provides that an entity is required to be registered for GST if:
(a) the entity is carrying on an enterprise, and
(b) the entity’s GST turnover meets the registration turnover threshold.
The applicable registration turnover threshold in this case is $75,000. You have a GST turnover that meets the registration turnover threshold if your current GST turnover is at or above $75,000 and your projected GST turnover is not below $75,000.
Goods and Services Tax Ruling GSTR 2001/7 explains the meaning of GST turnover and the effect of section 188-25 of the GST Act on the calculation of projected GST turnover. GSTR 2001/7 is available on our website at www.ato.gov.au
The entity is currently not registered for GST. On the facts provided, we consider that the entity will not satisfy all the requirements of section 23-5 of the GST Act. Consequently, the entity will not be required to be registered for GST at the time of the proposed sale. Therefore, the requirement of paragraph 9-5(d) of the GST Act will not be met.
As not all of the requirements of a taxable supply under section 9-5 of the GST Act will be met at the time of sale, the sale will not be a taxable supply.
Consequently, the entity will not be liable to pay GST on the sale of the Property.