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Edited version of private advice
Authorisation Number: 1052078961587
Date of advice: 18 January 2023
Ruling
Subject: GST and supply of property
Question
Is the proposed sale by you to the Purchaser of the property (the Property) a taxable supply under section 9-5 of the A New Tax System (Good and Services Tax) Act 1999 (GST Act)?
Answer
No.
Section 9-5 of the GST Act provides that you make a taxable supply if:
• you make the supply for consideration;
• the supply is made in the course or furtherance of an enterprise that you carry on,
• the supply is connected with the indirect tax zone (Australia); and
• you are 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, it is accepted that the sale of the Property is not a taxable supply as you are not registered or required to be registered for GST. As such you do not meet the requirements for making a taxable supply.
In addition, generally, the sale of residential premises is input taxed, except where they consist of commercial residential premises, or new residential premises.
Notwithstanding that you are not registered or required to be registered for GST, the sale of the Property would not be considered new residential premises. Relevantly section 40-75 of the GST Act provides the meaning of 'new residential premises' and explains that residential premises are considered new residential premises where they have not previously been sold as residential premises.
In this case you acquired new residential premises, and as such any subsequent sale of the same premises is not considered the supply of new residential premises.
Consequently, the sale of your Property is not a taxable supply and is not subject to GST.
This ruling applies for the following periods:
Financial year ending 30 June 20YY
Financial year ending 30 June 20YY
Financial year ending 30 June 20YY
Financial year ending 30 June 20YY
Financial year ending 30 June 20YY
The scheme commences on:
The date this ruling is issued.
Relevant facts and circumstances
You carry on an enterprise of leasing residential premises. Relevantly prior to the purchase of the Property, you had purchased and leased an apartment which has been used for residential rental purposes.
In late 20YY you entered a contract to purchase property off-the-plan which consisted of a house and land package (Property). This property settled in early 20YY.
As the sale of the Property was a taxable supply of new residential premises to you, as purchaser, you completed and lodged the GST property settlement withholding notification (Form 1) and GST property settlement date confirmation (Form 2) and made a withholding payment of $X to the Commissioner of Taxation (Commissioner).
It was your intention when you acquired the Property and that it would be used for the purpose of leasing the residential premises and derive residential rent.
Due to personal circumstances, you are now proposing to sell the Property, which consists of the newly constructed premised to a purchaser (Purchaser). In addition, you have also listed the apartment for sale.
You are not registered for GST.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5.