Edited version of private advice

Authorisation Number: 1052383300492

Date of advice: 29 April 2025

Ruling

Subject: GST - sale of real property

Question 1

Are the joint owners A and B (referred to as "You") making a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when they sell the Property?

Answer 1

No. You are not making a taxable supply when you sell the Property.

For the sale of real property to be a taxable supply, all the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) must be satisfied.

In this case, the application of section 9-5 of the GST Act is considered for each co-owner, in relation to their interest in the Property.

The proposed sale of the Property is for consideration and connected with Australia, hence paragraphs 9-5(a) and 9-5(c) of the GST Act are satisfied. However, the requirements of paragraphs 9-5(b) and 9-5(d) of the GST Act are not satisfied because:

•                     the sale is a mere realisation of a capital asset and hence, is not made in the course or furtherance of an enterprise that you carry on (paragraph 9 5(b) of the GST Act) and

•                     you are neither registered nor required to be registered for GST (paragraph 9 5(d) of the GST Act).

Therefore, as not all the requirements of section 9-5 of the GST Act are satisfied, the proposed sale of the Property is not a taxable supply.

Relevant facts and circumstances

•                     A and B as the executrices and sole beneficiaries of their relative's estate have jointly applied for this private ruling in relation to their proposed sale of the Property.

•                     The deceased purchased the Property as a vacant block of land in the late 1950s and built a three-bedroom house on the property in the late 1960s. The house remains the only permanent built structure on the land. The Property was your childhood home. No business has ever been conducted on the Property. The deceased remained the sole occupant of the Property until their death.

•                     As the named executors and beneficiaries, A and B have applied for probate of the deceased's estate and are waiting for the grant of probate.

•                     The certificate of title is currently in the name of the deceased. Once probate is granted, you will receive the Property as set out in the will. Following this, you will be registered as the joint owners of the Property.

•                     A developer has expressed interest to buy the Property, demolish the house and construct multiple townhouses or for some other commercial use.

•                     You wish to sell the Property to the developer.

•                     You are not carrying any enterprise in relation to the Property. The proposed sale of the Property is a one-off transaction.

•                     Ms A has recently reactivated her ABN to work in an independent contractor. This enterprise is totally unrelated to matters of property or real estate.

•                     Ms B had an ABN in the past for some work she did as a contractor. However, that work ceased many years ago and therefore she is not carrying on an enterprise.

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 section 184-1.

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.