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Edited version of private advice
Authorisation Number: 1052298661335
Date of advice: 30 August 2024
Ruling
Subject: Taxable supply - sale of property by the trust
Question
Will the sale of the property by the Trust be a taxable supply in accordance with section 9-5?
Answer
Yes. The sale of the property by the Trust will be a taxable supply in accordance with section 9-5.
This ruling applies for the following periods:
Financial year ending 30 June 2025, to
Financial year ending 30 June 2029.
The scheme commences on:
The day this private ruling is issued
Relevant facts and circumstances
The Trustee of the Trust purchased the property.
At the time of purchase, it was intended that the land would be subdivided, and two townhouses built to lease on a long-term basis.
The trustee's decided not to subdivide and build, after being unable to get council approval.
The decision was made to sell the property.
There is a shed on the property, but no residential premises.
The property is zoned residential.
The shed was previously leased to third parties. The Trust owns other commercial properties.
The Trust holds an Australian business number and is registered for goods and services tax (GST).
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
Reasons for decision
Under section 9-5, an entity makes a taxable supply where the supply:
1. is made for consideration; and
2. is made in the course or furtherance of an enterprise being carried on; and
3. is connected with the indirect tax zone; and
4. is made by a supplier who is registered or required to be registered for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
In this case, the property to be sold is located in the indirect tax zone, will be made in the course or furtherance of the enterprise being carried on by the Trust, will be for consideration and the supplier of the property is registered for GST. Therefore, all of the elements of section 9-5 will be satisfied when the property is sold.
The property contains a shed only and no other structures. The sale of the property does not meet any of the provisions under Divisions 38 and 40 which set out the supplies that would be either GST-free or input taxed.
As a result, as all of the provisions of section 9-5 are met, the sale of the property will be a taxable supply when it is sold by the Trust.