Edited version of private advice

Authorisation Number: 1052076574562

Date of advice: 12 January 2023

Ruling

Subject: Property - superannuation

Question

Will the sale of the property by the Superannuation Fund be a taxable supply in accordance with section 9-5?

Answer

Yes. The sale of the property will be a taxable supply when sold by the Superannuation Fund in accordance with section 9-5.

This ruling applies for the following periods:

Financial year ending 30 June 20XX, to

Financial year ending 30 June 20XX

The scheme commences on:

The date this notice of private ruling is issued.

Relevant facts and circumstances

•         The Superannuation Fund currently holds an Australian business number (ABN) and is registered for goods and services tax (GST).

•         The Superannuation Fund owns the property which is currently under a commercial lease agreement with a third party.

•         The lessee has conducted business activities on this property for a number of years and intends to continue to do so.

•         The Superannuation Fund is intending to sell the property for $XXX.

•         The sale price of the property has been obtained through a valuation by a registered valuer.

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 9-10

A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-20(1)(da)

Reasons for decision

Under section 9-5, an entity makes a taxable supply where the supply:

1.    is made for consideration; and

2.    is made in the furtherance of an enterprise being carried on; and

3.    is connected with the indirect tax zone; and

4.    is made by a supplier who is registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

In this case, the sale of the property will be for consideration, the property being sold is located in the indirect tax zone and the Superannuation Fund is registered for GST. Therefore, the sale of the property would satisfy 3 elements outlined above (1, 2 & 4). Accordingly, we need to determine whether the sale of the property is made in the furtherance of an enterprise being carried on by the Superannuation Fund.

The term enterprise is defined for GST purposes in subsection 9-20(1) and includes, among other things an activity or series of activities done:

(a)  in the form of a business; or

(b)  in the form of and adventure or concern in the nature of trade; or

(da) by a trustee of a complying superannuation fund, or if there is no trustee of the fund, by the person who manages the fund.

The purpose of a superannuation fund is to provide a benefit to a beneficiary in the form of a pension or lump sum payment. The Superannuation Fund owns the property from which a commercial leasing enterprise is being conducted. Any proceeds from the future sale of the property would be for the benefit of the beneficiary of the fund.

In this case, Superannuation Fund 's property is an asset used to run a commercial leasing enterprise. The sale of the property will be the sale of an asset in the course or furtherance of the enterprise being carried on by the Superannuation Fund.

As the Superannuation Fund is selling the asset, being the property, the sale will meet all 4 requirements under section 9-5 and will be a taxable supply when sold as the property forms part of the enterprise being carried on by the Superannuation Fund.