Edited version of private advice

Authorisation Number: 1052244638962

Date of advice: 24 April 2024

Ruling

Subject: GST at settlement

Question

Do you have a GST withholding obligation under subdivision 14-E of Schedule 1 to the Taxation Administration Act 1953 when you purchase the property?

Answer

No.

The scheme commences on:

The date of issue of this private ruling

Relevant facts and circumstances

You are the purchasers of the property.

The contract for the sale and purchase of the property was exchanged in 20XX.

The contract marked that the property is not subject to GST and consider the sale is input taxed. The vendors have occupied the property as their principal place of residence.

However, the vendors disclosed that the Final Occupation Certificate for the property was not issued until January 20XX.

The settlement is now contingent upon the ATO issuing a private ruling in relation to the GST status of the supply.

The purchasers have confirmed that the vendors do not have an ABN.

Relevant legislative provisions

Schedule 1 to the Taxation Administration Act 1953 section 14-250

Schedule 1 to the Taxation Administration Act 1953 section 14-255

Reasons for decision

Subsection 14-250(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA) states that you must pay an amount to the Commissioner if you are the recipient of a taxable supply of new residential premises.

Section 14-255 of the TAA requires a vendor to give to the purchasers a written notice stating whether they will be required to make a payment under s14-250 in relation to the supply.

In the contract exchanged, the following information was provided:

This sale is not a taxable supply because (one or more of the following may apply) the sale is:

☐ not made in the course or furtherance of an enterprise that the vendor carries on section 9-5(b))

☐ by a vendor who is neither registered nor required to be registered for GST (section 9-5(d))

☐ GST-free because the sale is the supply of a going concern under section 38-325

☐ GST-free because the sale is subdivided farm land or farm land supplied for farming under Subdivision 38-O

☑ input taxed because the sale is of eligible residential premises (sections 40-65, 40-75(2) and 195-1)

The GST at settlement provisions only require one of the boxes above to be ticked to prevent the supply of the property from being taxable. As the vendors do not have an ABN, they could also have ticked either or both of the first two boxes.

Therefore, the supply of the property to you is not a taxable supply. As such, you have no obligation to make a GST residential withholding payment.