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Edited version of private advice
Authorisation Number: 1051788684663
Date of advice: 10 December 2020
Ruling
Subject: GST and sale of property
Question
Is the sale of the Property by the Estate a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No
For the sale of the Property to be a taxable supply section 9-5 of the GST Act requires that:
(a) you make the supply for consideration
(b) the supply is made in the course or furtherance of an enterprise that you carry on
(c) the supply is connected with the indirect tax zone (Australia) and
(d) you are registered or required to be registered for GST.
In this case the Estate is not considered to be carrying on an enterprise and is also not registered or required to be registered for GST. Therefore, the sale of the Property will not satisfy the requirements of section 9-5 of the GST Act and the supply will not be a taxable supply.
This ruling applies for the following periods:
XX XXX 20XX till quarter ending XX XXX 20XX
The scheme commences on:
XX XXX 20XX
Relevant facts and circumstances
X is the executor for the estate of A (the Estate).
The Estate owns the Property which consists of vacant land.
The Property was acquired by A and their spouse in the early 1970's. However, after A's spouse passed away in the late 1970s, A has been the sole owner of the Property.
The Property has been used for grazing A's animals for over 40 years, however over the last 5 years it has been used for grazing Entity X's animals. Entity X is a company that is related to X, and X is related to A.
The adjacent land to the Property is owned by X and Z as tenants in common in equal shares.
A passed away in 20XX and after probate was granted, X became the registered proprietor of the Property in his capacity as executor of the Estate.
Whilst the Estate allows Entity X to graze animals on the Property there is no formal lease or licence arrangement and Entity X does not pay rent to the Estate (or to the owners of the adjacent property).
Entity X is not, and has never been, in partnership with the Estate or A.
Since the death of A, X has applied to council for the Property to be subdivided, however approval is yet to be granted. No other activity or development has taken place on the Property.
The executor of the Estate has now entered into a contract for the sale of the Property. On the same day X and Y entered into a contract for the sale for the adjacent property to the same purchaser.
The Estate is not registered for GST.
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 9-20
A New Tax System (Goods and Services Tax) Act 1999 Division 23
A New Tax System (Goods and Services Tax) Act 1999 section 184-1
A New Tax System (Goods and Services Tax) Act 1999 Division 188