Edited version of private advice

Authorisation Number: 1052124210211

Date of advice: 13 June 2023

Ruling

Subject: GST and sale of new residential premises

Question 1

Is GST payable under section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you, XX, make the supply by way of sale of your new residential unit located at XXXX?

Answer

No. The Commissioner considers you are not making a taxable supply under section 9-5 of the GST Act.

This ruling applies for the following period:

Financial year ended 30 June YYYY

The scheme commenced on:

1 July YYYY

Relevant facts and circumstances

You are spouses and have jointly applied for this private ruling dated DDMM YYYY.

•                     Spouse A is X years old and is a XXXX employed full time by XXXX. Spouse A is currently still in full time employment. Spouse A is not registered for GST.

•                     Spouse B is X years old and is a XXXX. Spouse B has reduced workdays from X to X days a week and intends reducing further. Spouse B is not registered for GST.

You have jointly acquired a residential property at XXXX (the Property) as tenants in common. The purchase contract was dated DD MM YYYY.

Your clear intention prior to signing the purchase contract was to build 2 townhouse residential units for leasing purposes to provide income in your retirement years and you had, at that time, confirmed that intention to your tax agent in writing.

•                     The Property was leased to an unrelated party until the demolition of the existing dwelling on the Property, during which time plans, permits etc were obtained.

•                     You consider that each of you is not required to be registered for GST as you do not, and have not, carry/carried on a business as builders/property developers. You did not have intent at any time to carry out a profit-making scheme or undertaking and you have not sold any properties in the past X years.

•                     At all times it was your intention to build and rent out long term.

•                     You have not at any stage claimed any GST input tax credits.

The townhouse units are now completed and known as X and Y XXXX (Unit X and Unit Y respectively).

•                     Unit X has been leased since DD MM YYYY.

•                     Unit Y will be sold. Auction is scheduled for DD MM YYYY.

The company that built the townhouse units is not related to you in any way.

The reason you are selling Unit Y is because you have received a letter from your bank dated DD MM YYYY which states that, given the rising interest rates and Spouse B's reduced hours of employment, it would be best if you sell one of the townhouse units to reduce your debt to a more affordable level.

Unit X will be retained and leased out long term.

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 Division 38

A New Tax System (Goods and Services Tax) Act 1999 Division 40

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