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Edited version of private advice
Authorisation Number: 1052244061290
Date of advice: 3 May 2024
Ruling
Subject: GST and registration
Question
Is the partnership required to be registered for GST?
Answer
No.
Section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity is required to be registered for GST if:
• the entity is carrying and enterprise, and
• the entity's GST turnover meets the registration turnover threshold (currently the threshold is $75,000 or $150,000 for not-for-profit organisations).
Under section 188-10 of the GST Act, an entity's GST turnover meets the registration turnover threshold, if:
• the entity's current GST turnover is at or above the registration turnover threshold, and the Commissioner is not satisfied that the entity's projected GST turnover is below the registration turnover threshold; or
• the entity's projected GST turnover is at or above the registration turnover threshold.
Under section 188-25 of the GST Act, a supply by way of transfer of ownership of a capital asset is disregarded when calculating an entity's projected GST turnover.
In this case, the partnership's current GST turnover is below $75,000 and the partnership is not registered for GST. Additionally, based on the information provided, the sale of the property by the partnership is a sale of a capital asset and therefore disregarded when calculating the partnership's projected GST turnover. Accordingly, the partnership is not required to be registered for GST as its GST turnover does not meet the registration turnover threshold.
This ruling applies for the following period
dd/mm/yyyy to dd/mm/yyyy
Relevant facts and circumstances
The partnership is not registered for GST.
The partnership acquired a commercial property in Australia for a specified amount on dd/mm/yyyy.
The partnership advertised the property for lease from when the property was purchased but could not find a tenant until dd/mm/yyyy.
From dd/mm/yyyy to dd/mm/yyyy, the partnership leased the property for an annual rental of $X.
The property was leased through an agent at market value.
The property was left vacant after the tenant moved out.
The partnership sold the Property for $X. Settlement took place on dd/mm/yyyy.
The partnership did not subdivide the property or convert it into residential premises prior to sale.
The purchase and sale of the property were made at arm's length and for market value.
The partnership does not carry on any other enterprise. The partnership was formed solely to purchase the property for lease.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 23-5.
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.