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Edited version of private advice
Authorisation Number: 1051852125382
Date of advice: 16 June 2021
Ruling
Subject: Goods and services tax and the in-specie distribution of property
Question
Is the in-specie distribution of a vacant block of land (Property) by you to a beneficiary, a taxable supply under section 9-5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No, the in-specie distribution of the Property by you to a beneficiary is not a taxable supply under section 9-5 of the GST Act.
Your in-specie distribution of the Property to the beneficiary, in this instance, is not made in the course of furtherance of your leasing enterprise.
Relevant facts and circumstances
You are the Trustee of an Investment Trust and are registered for GST.
You are in the business of leasing properties. You own X residential properties and X commercial property which you lease. You own a vacant block of land which you purchased in 20XX.
In 20XX, you entered into a Contract of Sale of Real Estate (Contract) to purchase another block of vacant land (Property).
You purchased the Property with cash. You did not claim an input tax credit for your purchase. You have not claimed any expenses in relation to your acquisition and ownership of the Property. All rates, maintenance etcetera have been capitalised, that is, added to the cost base of the Property. You have never used the Property to secure finance for any purpose.
You have not used the Property for anything and you have not undertaken any improvements, changes or development on the Property since your acquisition.
You purchased the Property with the intention of making an in-specie distribution to a beneficiary.
You have supplied a copy of a Trustee's Resolution to this effect.
Your intention changed when in Month 20XX the beneficiary was offered and declined the distribution of the Property.
You now intend to make an in-specie distribution of the property to another beneficiary. This beneficiary is entitled to the Property because they are a beneficiary of the trust and not because the distribution is made under a contractual relationship with you.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5