Edited version of private advice

Authorisation Number: 1051969286734

Date of advice: 4 April 2022

Ruling

Subject:GST - registration

Question

Are you required to be registered pursuant to section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No.

This ruling applies for the following period:

1 July 20XX - 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

X and X (You) are not registered for GST as a partnership or individually, nor have you been registered in the past.

You have purchased a commercial property located in the indirect tax zone (the Property). The Property was transferred into your names (as joint tenants) on DD/MM/YYYY.

You did not pay GST on the purchase of the Property.

The Property is currently leased to X for X years from DD/MM/YYYY to DD/MM/YYYY with an option to extend the lease for a further X years.

You intend to carry on the leasing enterprise as a long-term investment.

The annual rental turnover expected from leasing the Property is $X.

You do not own any other commercial property.

You do not carry on any other business or enterprise activities other than the leasing of the Property.

Your current and projected GST turnover is less than $75,000.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-20

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

A New Tax System (Goods and Services Tax) Act 1999 section 188-10

A New Tax System (Goods and Services Tax) Act 1999 section 188-15

A New Tax System (Goods and Services Tax) Act 1999 section 188-20

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

Reasons for decision

Section 23-5 states that you are required to be registered for GST if:

(a)  you are carrying on an enterprise; and

(b)  your GST turnover meets the registration turnover threshold (currently $75,000 unless you are a non-profit body).

The term 'enterprise' is defined in section 9-20 and includes an activity, or series of activities, done on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property.

In your case, you are leasing a commercial property located in the indirect tax zone. This activity falls within the scope of an 'enterprise' for GST purposes and as such paragraph 23-5(a) is satisfied.

The next issue to consider is whether your GST turnover meets the registration turnover threshold (currently $75,000, or $150,000 for non-profit bodies).

The meaning of GST turnover is contained in Division 188. Subsection 188-10(1) provides that your GST turnover will meet the registration turnover threshold if:

(a)  your current GST turnover is at or above $75,000 and the Commissioner is not satisfied that your projected GST turnover is less than $75,000; or

(b)  your projected GST turnover is at or above $75,000.

Your 'current GST turnover' is defined in section 188-15 as the sum of the values of all of your supplies made in a particular month and the preceding 11 months.

Your 'projected GST turnover' is defined in section 188-20 as the sum of the values of all of your supplies made in a particular month and the following 11 months.

Given the facts in this case, both your 'current GST turnover' and 'projected GST turnover' will not meet the registration turnover threshold of $75,000. Consequently, you do satisfy paragraph 23-5(b) and are not required to be registered pursuant to section 23-5.