Edited version of private advice

Authorisation Number: 1051986342819

Date of advice: 23 May 2022

Ruling

Subject: GST and the sale of commercial property

Question 1

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

Answer

No.

Your supply of the property located in the indirect tax zone (the Property) is the transfer of a capital asset and will therefore be disregarded from your projected GST turnover, pursuant to section 188-25 of the GST Act.

For the purpose of 188-10 of the GST Act, your current and projected GST turnover is nil.

As your GST turnover will not meet the registration turnover threshold of $75,000, you are not required to be registered in accordance with section 23-5.

Question 2

Will your sale of the property located in the indirect tax zone (the Property) be a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No.

Your sale of the Property will not be a taxable supply under section 9-5 of the GST Act because you are neither registered nor required to be registered for GST. Therefore, GST will not be payable on the sale of the Property.

This ruling applies for the following periods:

1 July 2021 to 30 June 20XX

1 July 2022 to 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

X (You) are not registered for GST as an individual, nor have you been registered in the past.

You are X years old.

In MM/YYYY your spouse X passed away.

You and your late spouse, X, had a partnership ABN XX XXX XXX XXX effective from DD/MM/YYYY to DD/MM/YYYY.

The partnership was registered for GST from DD/MM/YYYY to DD/MM/YYYY.

In YYYY you purchased the commercial property located in the indirect tax zone (the Property) jointly with your late spouse.

The Property comprises an area of approximately Xm².

From YYYY to the early YYYY's you leased the Property to an unrelated party.

From the early YYYY's, you and your late spouse operated a deli from the Property until your retirement in MM/YYYY.

Following your retirement:

•         the Property has remained vacant and has not been used for income producing purposes.

•         intermittent attempts were made to both lease and sell the Property; however, due to maintenance issues with the building and no suitable offers being made, this did not eventuate.

•         rates and other property expenses including maintenance and repairs were paid for using your joint personal savings.

In MM/YYYY you and your late spouse notified the Commissioner that you were no longer carrying on an enterprise and you requested your partnership GST registration be cancelled. The Commissioner was satisfied that you were not required to be registered and cancelled your GST registration effective DD/MM/YYYY.

In MM/YYYY the Property was placed on the market for sale.

Prior to listing the Property for sale, you engaged family members and contractors to undertake maintenance and repair works at the Property including a general clean up, weed management, fixing damage caused by vandalism and restoring the ceiling and front verandah that had collapsed due to water damage.

You have supplied photographs of the Property taken before and after the maintenance and repair works.

•         Photo 1: Collapsed ceiling as a result of water damage, dated DD/MM/YYYY

•         Photo 2: Outdoor area prior to clean up and weed management, dated DD/MM/YYYY

•         Photo 3: Current appearance of the building (internal), after maintenance and repair works, dated DD/MM/YYYY

The Property is listed for sale via Auction on DD/MM/YYYY.

You do not intend to carry on any enterprise after selling the Property.

You do not own any other commercial property.

The Special Conditions detailed in Part X of the Agreement for Sale and Purchase of Land state, 'This contract is subject to the surviving joint tenant (X) lodging with the LTO an application to note death of the deceased joint tenant (X) and the registration thereof at or prior to the settlement date of this contract.'

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

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

A New Tax System (Goods and Services Tax) Act 1999 Section 9-40

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