Edited version of private advice

Authorisation Number: 1052171003546

Date of advice: 19 September 2023

Ruling

Subject: GST - property

Question

When you, Entity A, sell each of the properties located at Address A and Address B and Address C and Address D, will you be making a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. You will not making a taxable supply under section 9-5 of the GST Act when you sell each of the Properties as all the requirements under section 9-5 of the GST Act will not be satisfied. This is because the Commissioner has determined you will not be required to be registered for GST in relation to the sale. Therefore, GST will not be payable on the sale.

This ruling applies for the following periods:

DDMMYYYY to DDMMYYYY

The scheme commenced on:

DDMMYYYY

Relevant facts and circumstances

Entity A (You) is a discretionary investment trust with 2 trustees - Individual A (Individual A) and Individual B (Individual B) (the Trustees).

Both Individual A and Individual B are the beneficiaries of the trust and both are Australian citizens.

You are not currently registered for GST.

On DDMMYYYY, the Trustees purchased two parcels of land situated at Address A and Address B as 'house and land' packages, with the intention to build duplexes and subsequently holding them out as rental properties.

The construction of the duplexes were completed by a builder and was funded through bank mortgages. The construction at Address A was completed on DDMMYYYY and the construction at Address B was completed on DDMMYYYY.

The addresses of the Properties proposed to be sold are:

• Address A;
• Address B;
• Address C; and

•         Address D

(collectively, the Properties).

Address A and Address B were rented out to tenants in DDMMYYYY. Address C and Address D were rented out in DDMMYYYY.

The Properties have yet to be sold nor listed on the market.

Your intention is to sell the Properties with the existing tenants in place.

The Properties were not built for the purpose of selling and were predominantly for the purpose of making input taxed supplies, in the form of rental income.

In DDMMYYYY, Individual B was diagnosed with a medical condition. As such, she had to quit her job and is undergoing a lengthy treatment with an uncertain future.

The long-term treatment that Individual B is currently receiving impacted the serviceability of the loans and also due to a significant increase in interest rates.

Depending on your circumstances in the future, you might not sell all of the Properties.

Besides leasing the Properties, you are also leasing two other residential properties located at Address E and Address F from which you are earning passive rental income from leasing these properties.

The total gross rental income if all the current properties are fully tenanted throughout the year will be $#.

You do not carry on any other enterprises nor receive any other income.

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 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 Division 135

A New Tax System (Goods and Services Tax) Act 1999 Section 188-10

A New Tax System (Goods and Services Tax) Act 1999 Section 188-15

A New Tax System (Goods and Services Tax) Act 1999 Section 188-20

A New Tax System (Goods and Services Tax) Act 1999 Section 188-25

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