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Edited version of private advice
Authorisation Number: 1051783807084
Date of advice: 24 November 2020
Ruling
Subject: GST and sale of residential premises
Question 1
Are you, <name>, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) when you sell the property located at <address> and will GST be payable on the sale?
Answer
No, you are not making a taxable supply under section 9-5 of the GST Act when you sell the property. This is because you are making an input taxed supply of residential premises to be used predominantly for residential accommodation under subsection 40-65(1) of the GST Act and accordingly, GST will not be payable on the sale.
Relevant facts and circumstances
You, <name>, are registered for GST from <ddmmyyyy>.
In <mmyyyy>, you purchased a property with an existing residential house located at <address> (the Property). The description of the Property includes the following:
• Zoning: Residential A
• Primary land use: Dwelling - large house site
• Identified as <Lot identity> title reference <number>
• <number> acre in land area
• No other structures on the land other than the house
• The house comprises <number> bedroom(s), lounge, kitchen, bathroom and toilet.
The Property was rented out as a residential property until <mmyyyy> at which time the house was converted into a <business type> with the following renovations carried out:
• A <business item> was installed in one bedroom.
• A <business item> was installed at the lounge area.
There was no other change made to the house.
From <mmyyyy> the Property was leased to your related entity being a <specified entity>. You are a <position> of the <specified entity> and there was no lease document.
The <business type> was closed in <mmyyyy> and the <business item> was sold. The <business item> was removed. The house was put back to its original state.
Since then the Property was vacant until a few months ago when <specified entity> moved in to live as his residence. There was no lease entered into with <specified entity> and <specified entity> does not pay rent. You pay for all the outgoings in relation to the Property.
On <ddmmyyyy> you entered into the contract for the sale of the Property to a developer.
You did not carry out any development or subdivision of the land and the Property will be sold in a single title.
Relevant legislative provisions
The A New Tax System (Goods and services Tax) Act 1999 section 9-5
The A New Tax System (Goods and services Tax) Act 1999 division 38
The A New Tax System (Goods and services Tax) Act 1999 division 40
The A New Tax System (Goods and services Tax) Act 1999 subsection 40-65(1)
The A New Tax System (Goods and services Tax) Act 1999 subsection 40-75
The A New Tax System (Goods and services Tax) Act 1999 section 195-1
ATO view documents
Goods and Services Tax Ruling GSTR 2012/5 Goods and services tax: residential premises