Edited version of private advice

Authorisation Number: 1051936863556

Date of advice: 23 December 2021

Ruling

Subject: GST and the sale of a subdivided residence

Question

Was your sale of Unit X a taxable supply pursuant to section 9-5 of the of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. your supply of Unit X is not a taxable supply.

Your intention from the time of purchasing the Property on dd/mm/yyyy until the sale was to live in Unit 1 as your private residence. Therefore, the sale of Unit 1, despite being a supply of new residential premises, is part of a private activity and is not in the course of an enterprise and is therefore not subject to GST.

Relevant facts and circumstances

On dd/mm/yyyy you purchased the Property.

Your original intention in purchasing the Property was to demolish the original premises and build three units, two to lease out and provide rental income to you and one to live in as your residence.

Development and planning

Sometime later a planning Permit was issued in relation to the subdivision of the Property into three lots. It was approved by the Council subject to various infrastructure and telecommunications, landscaping and environmental requirements.

Demolition of the Property commenced in dd/mm/yyyy and construction began in dd/mm/yyyy.

The plan for subdividing the property was registered with the Department of Environment, Land, Water and Planning on dd/mm/yyyy. There is also Landgate Subdivision Plan dated dd/mm/yyyy signed by the Council which was subject to various infrastructure, telecommunications, landscaping and environmental requirements. The construction was completed and an Occupancy Certificate was issued in dd/mm/yyyy.

You continued with your plans to rent Units Y, Z and reside in Unit X.

Unit Z

Unit Z was initially rented and then you entered into a contract to sell Unit Z to XXXX. This property settled on dd/mm/yyyy. XXXX is an unrelated third party.

Unit Y

Unit Y was rented from when it was built up until the present time.

Unit X

You moved into Unit X in approximately dd/mm/yyyy after landscaping and decorating was completed.

There was a period after this in early YYYY, as the marriage having been in a state of flux for some time, you moved back to your husband's house but kept Unit X as a back-up while trialling a reconciliation. The marriage was finally reconciled and it was decided to sell the husband's residence and you both then moved back to Unit X in dd/mm/yyyy. With the marriage firmly stabilised after about a year, another residence was purchased, and it was decided to sell unit 1 on dd/mm/yyyy.

On dd/mm/yyyy you entered into a contract to sell Unit X for $xxx,xxx.

Clause xxx of Special Conditions of the Contract for the sale of the Property states that:

"No GST Withholding is required unless the below box in subsection (x) is crossed:

(a ) GST Withholding is required unless the purchaser is registered for GST and acquires the land for creditable purposes in accordance with section 14-255(2) of Schedule 1 to the Taxation Administration Act 1953 (Cth).

On dd/mm/yyyy your solicitor, provided the solicitor for the purchaser with a GST Residential Withholding Supplier Notification further to Section 14-250 of Schedule 1 of Taxation Administration Act 1953 (Cth) which stated GST withholding not required.

The sale settled on dd/mm/yyyy.

A withholding amount of $XX,XXX amount is currently being held in trust by the purchaser's solicitor.