| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052305368872
Date of advice: 18 September 2024
Ruling
Subject: Income - sale of property
Question 1
Will the sale of the property by the Partnership, qualify as a taxable supply in accordance with section 9-5?
Answer 1
No.As the sale of the property does not meet all of the requirements of section 9-5 the sale of the property will not be a taxable supply for the Partnership when sold.
This ruling applies for the following periods:
Financial year ending 30 June 20XX, to
Financial year ending 30 June 20XX
The scheme commences on:
The date this private ruling is issued
Relevant facts and circumstances
• artnership purchased the property on XX XXXX XXXX.
• roperty was operating entirely as a provider of permanent residential accommodation.
• artnership leased the property to a company, and the company was responsible for the running of the accommodation business.
• easing enterprise the Partnership was carrying on ceased.
• has been no further subdivision of the property.
• of the dwellings on the property have been removed and it is planned that the remainder will be removed prior to sale.
• artnership does not hold an Australian Business Number (ABN) and is not 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. de for consideration; and
2. de in the course or furtherance of an enterprise being carried on; and
3. nnected with the indirect tax zone; and
4. de 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 and will be for consideration. Therefore, two of the elements (1 & 3) of section 9-5 will be satisfied when the property is sold. Accordingly, we need to determine whether the other two elements (2 & 4) would be satisfied. If this were the case, the sale of the whole property would satisfy all of the requirements under section 9-5 and would be a taxable supply.
The Partnership was carrying on a leasing enterprise up until XX XXXX XXXX, where the property was leased to a company who ran the residential park. This leasing enterprise has ceased, and the Partnership was not registered or required to be registered for GST during the time that the leasing enterprise was being carried on.
As a result, subsections 9-5(3) & (4) have not been met as the Partnership is not carrying on an enterprise and is not registered or required to be registered for GST.
We also do not consider that the activity of selling the property would constitute an adventure or concern in the nature of trade and, as such, will not be sold in connection with an enterprise being carried on by the Partnership.
Conclusion
Therefore, because all of the provisions of section 9-5 haven't been met the sale of the property will not be a taxable supply when it is sold by the Partnership.