Edited version of private advice

Authorisation Number: 1052073670818

Date of advice: 22 December 2022

Ruling

Subject: GST - sale of residential premise

Question

Will the supply of the Property situated in the indirect tax zone made by you, Entity A, to the Purchaser under the Sale Contract be an input taxed supply of residential premises pursuant to section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the supply of the Property will be an input taxed supply under section 40-65 of the GST Act. This is because the Commissioner has determined that the Property is residential premises to be used predominantly for residential accommodation. Therefore, GST would not be applicable on the supply of the Property.

This ruling applies for the following periods:

1 July 20XX to 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Entity A (You) is a registered charity established by Entity B. You have been registered for GST since DD/MM/YYYY.

You work cooperatively with private landowners to protect habitats and wildlife on private land in perpetuity.

You purchased a property situated in the indirect tax zone (the Property) under a Contract of Sale dated DD/MM/YYYY (the Acquisition Contract).

The land where the Property is situated is particularly described as 'Lot X' with the following property identifiers:

•         Plan of subdivision number: X

•         Volume: X

•         Folio: X

You became the registered owner of the Property upon settlement of the Acquisition Contract.

The Property is approximately X hectares (X acres) in size and is zoned as 'X'.

The Property is described as a rural lifestyle property comprising of a single dwelling (approximately X square metres in size) that is affixed to the ground, together with an outdoor composting toilet, shed, various outbuildings and surrounding bushland (the Dwelling). The Dwelling contains one bedroom, combined dining and lounge area, kitchen, and bathroom equipped with a shower and basin. The remainder of the Property is vacant bushland.

There are no services connected to the Dwelling, however, there is a solar panel on the roof and a battery that powers the internal lighting and provides electricity to the Dwelling. There is a pump for rainwater which is used to provide water to the Dwelling.

You provided images of the Property.

The Property is fenced and there is a gate at the entrance to the Property with a driveway leading to the Dwelling.

The Property can be accessed by entering through the gate at the entrance.

You intend to sell the Property, have identified a Purchaser (the Purchaser) for the Property and have since entered into a Contract of Sale with the Purchaser (Sale Contract).

You have provided us with a Sale Contract and it has been drafted on the basis that the sale of the Property will be an input taxed supply of existing residential premises and will not be subjected to GST.

As stated in the Sale Contract, you sold the Property for $X.

The Sale Contract is conditional on the Purchaser entering into a covenant on or prior to settlement date (being X days after the date of the Sale Contract). Upon settlement, you will register the covenant on the Property.

You have provided a draft of the covenant (the Draft Covenant). Clause X of the Draft Covenant provides, broadly, that the owner must not subdivide or develop the Property in the manner described in clause X without your prior consent. The owner of the Property may construct or place one dwelling and any of the usual outbuildings associated with a dwelling without your prior consent.

The covenant also prohibits the use of the Property for any trade, industry or business save for home occupation.

The Purchaser can use the bushland space for their own personal enjoyment/recreational use (subject to their obligations/duties under the Draft Covenant).

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 9-40

A New Tax System (Goods and Services Tax) Act 1999 Section 38-250

A New Tax System (Goods and Services Tax) Act 1999 Section 40-65

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