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This edited version has been archived due to the length of time since original publication.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: 1051494347997

Date of advice: 22 March 2019

Ruling

Subject: GST and sale of real property

Question

Will you be required to register for the goods and services tax (GST) when you sell your Land?

Answer

No.

This ruling applies for the specified period.

The scheme commences on the specified date.

Relevant facts and circumstances

    ● You hold the legal and beneficial ownership of the Land.

    ● The Land has been used by another entity exclusively for a business that the entity has carried on for decades.

    ● You inherited the Land from your parent many years ago.

    ● You have allowed the other entity to continue operating their business on the Land.

    ● You receive a salary as an employee and you do not carry on any other business or enterprise activities yourself.

    ● You propose to sell the Land (Proposed Sale) as is, to a third party.

    ● You are not registered for GST.

    ● You do not

      ○ derive income from the Land;

      ○ carry on any enterprise or business yourself in any capacity;

      ○ charge the other entity any rent or otherwise, whether monetary or non-monetary consideration, for the occupation and use of your Land.

    ● You do not make and you are not likely to make any supplies for consideration in the 11 months up to and including the month of the Proposed sale.

    ● You will not make and you are not likely to make any supplies for consideration in the 11 months after and including the month of the Proposed Sale.

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 subsection 188-10(1), and

A New Tax System (Goods and Services Tax) Act 1999 section 188-25.

Reasons for decision

Requirement to be registered for GST

Section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity is required to be registered for GST purposes if both of the following requirements are met:

    ● it is carrying on an enterprise; and

    ● its GST turnover meets the registration turnover threshold (which is currently $75,000 for entities other than non-profit entities).

Registration turnover threshold

Subsection 188-10(1) of the GST Act provides that you have a GST turnover that meets the registration turnover threshold if:

    ● your current GST turnover is at or above the registration turnover threshold, and the Commissioner is not satisfied that your projected GST turnover is below the registration turnover threshold, or

    ● your projected GST turnover is at or above the registration turnover threshold.

In calculating your GST turnover under Division 188 of the GST Act certain supplies are excluded. Section 188-25 provides that when calculating your projected GST turnover, you do not include any supplies made, or likely to be made by you:

    ● by way of transfer of ownership of a capital asset, or

    ● solely as a consequence of ceasing an enterprise or substantially and permanently reducing the size or scale of your enterprise.

On the facts provided, we consider that your GST turnover will not meet the GST registration turnover threshold at the time of the Proposed Sale. Consequently, you will not satisfy all the requirements of section 23-5 of the GST Act and you will not be required to be registered for GST at the time of the Proposed Sale of your Land.


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