Private ruling: Commercial property - taxable supply
Date of advice: 2 December 2025
Published: 27 January 2026
Ruling period: 1 July YYYY to 30 June YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Will the sale of the property situated at X (Factory1) be a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, your sale of Factory1 will not be a taxable supply pursuant to section 9-5 of the GST Act. We consider that providing Factory1 for use by your company (the Company) in operating the X business constitutes an enterprise for GST purposes under paragraph 9-20(1)(c) of the GST Act. This is because it involves the activity of allowing or licensing the use of Factory1 to the company. The sale of Factory1 is an activity undertaken in the course of terminating that licensing enterprise. Accordingly, the sale satisfies paragraph 9-5(b) of the GST Act, as it is a supply made in the course or furtherance of the enterprise. However, the sale of Factory1 also meets the requirement of being a transfer of a capital asset under paragraph 188-25(a) of the GST Act. As a result, the sale proceeds are disregarded when calculating your projected GST turnover. This means your GST turnover does not meet the registration turnover threshold. Consequently, you are not required to register for GST in relation to the sale, and the requirement in paragraph 9-5(d) for making a taxable supply is not met.

Relevant facts and circumstances: In YYYY, you jointly purchased the property (Factory1) with your partner, for $XX, XXX. Factory1 had three parcels which are: • Lot AA RPXXXXX • Lot BB RPYYYYY • Lot CC RPZZZZZ In YYYY, you jointly purchased another property (Factory2) with your partner for $XX, XXX. Factory 2 had three parcels which are: • Lot DD RPXXXXX • Lot EE RPYYYYY • Lot FF RPZZZZZ At the time of purchase, both Factory1 and Factory2 were operating as factories, with two allocated parking spaces each. The factory component of the properties has the following configurations: • Factory1 has land area of approximately XX square meters with factory building floor size of approximately XX square meters. • Factory2 has land area of approximately XX square meters with factory building floor size of approximately XX square meters. In YYYY, you purchased your partner's share of Factory1 and Factory2 for $XX, XXX and $XX, XXX respectively. You have estimated the purchase date and price of Factory1 and Factory2 based on your recollection and publicly available data. In YYYY, Factory1 and Factory2 were subject to a not in common ownership (Nico) subdivision. The Nico subdivision did not change your ownership percentage of Factory1 and Factory2. You operated a business under the company name X (the Company) with the Australian Business Number (ABN) XXXXXXXXXX. The Company is registered for Goods and Services Tax (GST). You have been the sole shareholder of this company since YYYY, and prior to that, you held a XX% shareholding. Factory1 and Factory2 had been continually used in your business since their purchase. The Company did not pay rent for the use of the properties and there is no lease in place. The Company pays outgoings for the properties directly. These are not a reimbursement to you. The total amount of the outgoings paid by the Company in relation each of the properties are as follows. • Council rates $ XX per annum • Water rates $ XX per quarter • Owner's Corporation fees $ XX per annum • Land tax $ XX per annum The final product was produced by the Company in MM YY, with the last sales occurring in MM YY. Following the cessation of trading activities, the properties were thoroughly cleaned and prepared for sale. Additionally, all business equipment's were sold off since. Factory1 and Factory2 have not been used for any purpose other than by the Company in the X business. You are now preparing to close your business operated under the Company and retire, with the intention of selling one of the properties. The expected proceeds from the sale are estimated to exceed $XX, XXX, potentially reaching $XXX, XXX or more. You have not registered for an ABN as a sole trader or registered for GST. Factory1 was listed for sale on DD MM YYYY. In addition to Factory1 and Factory2, you also own a residential property which serves as your principal place of residence. All other properties previously owned by you, either solely or jointly, were residential in nature and were used as your main residence during the period of ownership. Except for allowing the use of your two factories by the Company, you do not conduct any other activities in your own right as an individual.

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 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 Division 38 | A New Tax System (Goods and Services Tax) Act 1999 Division 40 | A New Tax System (Goods and Services Tax) Act 1999 Division 188 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1