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Edited version of private advice
Authorisation Number: 1052035101392
Date of advice: 3 October 2022
Ruling
Subject: GST and residential premises
The Commissioner was asked numerous questions about GST and residential premises and has ruled on each of the questions.
Question 1
Will Entity 1 (You) be making a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you supply property by way of lease in reference to the following periods:
• Period 1 - dd/mm/yyyy (Lease commencement date) to the date of the removal/demolition of the existing residential premises;
• Period 2 - dd/mm/yyyy (date of the removal/demolition of the existing residential premises) to the date construction of the new premises is completed (date of practical completion); and
• Period 3 - date of practical completion to the termination date of the Lease.
Answer
Period 1 - No, the supply of the Property by way of lease during Period 1 is not a taxable supply. The supply is an input taxed supply pursuant to section 40-35 of the GST Act.
Period 2 - Yes, the supply of the Property by way of Lease during Period 2 is a taxable supply pursuant to section 9-5 of the GST Act.
Period 3 - No, the supply of the Premises by way of lease during Period 3 will be is an input taxed supply pursuant to section 40-35 of the GST Act. The supply of the Premises during Period 3 is considered residential premises as defined for GST purposes and the Premises are to be used predominately for residential accommodation.
Question 2
Will your acquisitions related to the construction and development of the Premises be for a creditable purpose pursuant to section 11-15 of the GST Act?
Answer
No. The acquisitions relate to the input taxed supply of the lease of the developed Premises to Entity 2 and therefore are not acquired for a creditable purpose.
Question 3
Will Entity 2 be making a creditable acquisition as defined in section 11-5 of the GST Act in leasing the Property/Premises from you?
Answer
No.
Question 4
On completion of the construction and development of the Premises, will the Premises satisfy the definition of 'commercial residential premises' pursuant to section 195-1 of the GST Act?
Answer
No.