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Edited version of private advice
Authorisation Number: 1051800469888
Date of advice: 2 February 2021
Ruling
Subject: Taxable supply of sale of property
Question 1
Is xxx's sale of land at xxx a taxable supply pursuant to section 9-5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No, the sale of your interest in the land at xxx is not a taxable supply as not all the requirements under section 9-5 of the GST Act are met.
Question 2
Will the purchaser therefore be required to withhold GST under new vacant land rules?
Answer
No, as the sale of your interest in the land at xxx is not a taxable supply.
This ruling applies for the following period:
1 July xxx to 30 September xxx
The scheme commences on:
1 July xxx
Relevant facts and circumstances
xxx (You) is registered for GST as of xxx.
You carry on an enterprise that includes the operation of xxx (closed in xxx) and xxx.
On xxx you entered into a contract with xxx (Vendor) to purchase land located at xxx (Property) for $xxx. Settlement occurred on xxx.
You purchased the Property to be used as a holiday home.
The Property was acquired through a trust structure to protect the asset from your xxx operations.
The Property is xxx square meters and is zoned xxx.
You initiated plans to be drawn up for a holiday home, however the house was never built as your business was experiencing a high growth period.
On xxx, xxx (Purchaser) purchased the Property for $xxx. Settlement occurred on xxx.
The Purchaser is not registered for GST.
Due to the downturn in business conditions caused by Coronavirus, you sold the Property to release capital.
In two emails dated xxx and xxx your tax agent xxx advised us of the following:
• You contributed $xxx of personal funds to the purchase of Property and took a loan for the balance.
• At the time of acquiring the Property, you and your controlling minds were unaware of the benefits of having the Property otherwise acquired under a different trust.
• You have not claimed income tax deductions for the interest charged for the loan on the Property.
• The Vendor did not charge GST when you purchased the Property which settled in xxx.
• You have not made any improvements to the Property.
• The Property has never been used as a part of your enterprise.
• You paid $xxx to xxx to prepare an architect designed xxx house. However, the prepared plans were unsatisfactory, and you did not proceed with the plans.
• You were in the process of obtaining quotes from other architects when your xxx business entered a growth phase. Thus, plans for building a house on the Property did not proceed.