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Edited version of private advice
Authorisation Number: 1052146657696
Date of advice: 24 July 2023
Ruling
Subject: GST and the transfer of property
Question
Was the calculation of the GST liability by the trust,relating to the transfer of the property, correct?
Answer
No. The transfer was an input taxed supply.
The scheme commenced on:
The date of issue of this private ruling.
Relevant facts and circumstances
The trust purchased a property. The property is a residential house and land and was using borrowed funds lent. X and Yare the directors of the trustee.
The property has been used for private purposes since that time.
The trust is registered for GST and completes BAS on a quarterly basis.
At a meeting of directors for the trust on, it was decided that the property should be transferred to the directors jointly in recognition of the outstanding loan as shown on the balance sheet together with recognition of unpaid labour contributed to the trustee by both directors. A copy of the meeting minutes was provided as part of this private ruling application.
In order to transfer ownership, and because the transaction was between associated parties, valuers were engaged to provide a sworn valuation which they determined to be $X.
Both parties to the transaction declared their intention to access the margin scheme to determine the GST liability. These letters, although not individually certified by a Justice of the Peace, were included in the parcel of documents witnessed and submitted to the Queensland Office of State Revenue. The transfer documents were stamped by the Queensland Titles Registry.
The trust has remitted the amount of GST to the ATO as GST.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 40-65
Reasons for decision
The supply of residential premises is an input taxed supply under s40-65 of the GST Act unless the premises are either commercial residential premises or new residential premises.
As the supply by the trust is of a residential house that has been used for private purposes since purchase, it is making an input taxed supply.
As such, there is no GST liability arising from the transfer and the margin scheme is not relevant.
The trust is entitled to amend its BAS to recover the GST previously paid.