Edited version of private advice

Authorisation Number: 1051849266138

Date of advice: 10 September 2021

Ruling

Subject: GST and purchase of residential premises

Question

Is the supply of the Property by the financier (FFF) to you subject to GST?

All further legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless stated otherwise.

Answer

No, the supply of the Property by FFF to you is not subject to GST. Pursuant to subsection 40-75(2) the Property would not be new residential premises because the Property has been rented out for a continuous period of at least 5 years since the Property first became residential premises. The supply of the Property would be input taxed in accordance with subsection 40-65(1).

Relevant facts and circumstances

You advised of the following facts:

•         The Property is a residential property and you purchased the Property in 2XXX from FFF. The purchase transaction was a mortgagee in possession sale with FFF being the vendor as per listed in the contract for sale (the Contract).

•         FFF is registered for GST and their nominated legal representative listed the sale as a taxable supply.

•         When you signed the Contract you were advised that the sale price would be $X but that it may be subject to 10% GST. You bought the Property and paid an amount of $Y in GST that was in addition to the $X.

•         The Contract specified that the sale of the Property to you was a taxable supply and that GST was payable in full.

•         The Contract was executed on a particular date and settlement occurred on XX/XX/2XXX.

•         Further investigations by you revealed that the Property had been leased out by the previous owner for 5 years. The construction of the Property was completed in 2XXX and you acquired it on XX/XX/2XXX. As such, you contend that the Property was not new residential premises for GST purposes.

•         The Property was not used for commercial purposes previous to your purchase.

•         The Property was not newly constructed when you purchased it.

•         The GST you paid has been held in a trust account now for a number of years. You are applying for this private ruling for confirmation of the GST treatment of the purchase so that you can seek the return of the GST amount to you from FFF.

•         You have sought FFF's co-operation to seek this private ruling and FFF has agreed to co-operate in this regard.

The mortgagor

The mortgagor of the Property (the Mortgagor) was DDD.

Public records show that the Mortgagor's ABN was active from YY/YY/YYY to YY/YY/YYY and was cancelled from YY/YY/YYYY. Those records also show that the Mortgagor's GST registration was active from YY/YY/YYY to YY/YY/YYY and was cancelled from YY/YY/YYYY.

Other information

At the time of purchase:

•         the Property had not previously been sold as residential premises;

•         the Property had not previously been the subject of a long-term lease;

•         the Property had not been created through substantial renovations of a building; and

•         the Property had not been built, or contain a building that has been built, to replace demolished premises on the same land.

For the period of at least 5 years since the Property first became residential premises, it had only been used for leasing out as residential premises.

As advised, you spoke to a representative of a real estate agent to seek confirmation on whether the Property was rented out for a continuous period of at least 5 years since the Property first became residential premises. The real estate agent confirmed that the Property has been rented out for a continuous period of at least 5 years since the Property first became residential premises.