Edited version of private advice

Authorisation Number: 1051810193108

Date of advice: 1 March 2021

Ruling

Subject: GST and sale of property

Question

Is the sale of the specified property or any part of the property (the Property) a taxable supply under subsection 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No.

The sale of the Property or any part of the Property is not a taxable supply under section 9-5 of the GST Act. The sale of the property is wholly an input taxed supply of residential premises under section 40-65 of the GST Act.

Relevant facts and circumstances

On a specified date the Vendor entered into a contract for the sale of the Property with the Purchaser.

The Property consists of a building of approximately X square metres in area situated on land of Y square metres in area.

The contract of sale settled on a specified date.

The original building was designed and built as a home on a larger parcel of land in a specified year.

The original property was used as residential premises for many years until a specified year when it was sold to a company (the company) that used the property in its business until a specified year.

The Vendor acquired the property in a specified year. The Vendor subdivided the land into a specified number of lots and sold the vacant lots to be developed for the purpose of a single dwelling. These sales were treated as taxable supplies and are not the subject of this private ruling.

The Property was one of the last lots to be sold.

The building contains X number of bedrooms, Y number of bathrooms, laundry, hall, lounge area, deck, dining room and storerooms.

The land around the building is the building's curtilage.

The land is zoned General Residential.

The company had adapted areas of the building for use in its business by making specified functional changes to the rooms it wished to occupy. These adaptations did not amount to substantial renovations. The building retained the character of residential premises even though it was used for commercial purposes.

During the period of its use by the company, the main parts of the building were adequately maintained while the remainder of the building was seldom used. Those areas which were seldom used by the company may have been in a minor state of disrepair.

The building has never been unfit for human habitation. The building was in reasonable condition when the Property was acquired by the Purchaser and was not dilapidated. All utility services were connected to the Property at the time of sale.

In the period immediately preceding settlement, the Property was occupied as a residence or for residential accommodation by a potential buyer. The vendor had entered into a contract for the sale of the Property with the potential buyer who after the exchange of contracts for sale resided in the Property for a period of two years. The potential buyer was to occupy the premises until settlement, however, that sale fell through.

During that time the potential buyer commenced the removal of the commercial adaptations as necessary such that the building would be restored to its original condition as a residence. The potential buyer removed specified commercial equipment, appliances and structures from the premises.

The original layout of the building has not been substantially altered throughout the years since it was built. The original building has largely retained its original layout and external features throughout the years and was not substantially renovated during its period of use by the company, or since.

The Vendor has been registered for GST since a specified date.

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 section 40-65

The A New Tax System (Goods and services Tax) Act 1999 section 195-1