Private ruling: GST and sale of property
Date of advice: 1 May 2019
Published: June 2019
Ruling period: 1 May 2019 – 30 April 2023

Ruling: Q1: Will you be liable for GST pursuant to section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 in respect to the sale of your interest in the ‘Remaining Property’ being situated at a specified location? | A1: No

Relevant facts and circumstances: Mr and Mrs X purchased property (the Land) approximately 70 years ago. Mr and Mrs X built residential premises (family home) on the Land. In the 1970’s, an area of land containing the residential dwelling was subdivided/carved off from the Land. Also in the late 1970’s, a vacant area of the Land was subdivided and transferred to the eldest offspring (Individual A) who subsequently constructed their residence on the block. Mr X passed away with title of both the land containing the residential premises and the remainder of the Land (the Property) passed to Mrs X. Mrs X subsequently constructed a garage/shed on the Property. Mrs X passed away. The Property was distributed to their children. Individual A, acting as Executor of the Estate, subdivided 1/5 th of the Property and attached the subdivided land, which contained the garage/shed, to their existing residence. The remainder of the Property (Remaining Property) is, and has always has been, vacant land and was used by Mr and Mrs X for personal use as a market garden and grazing for livestock. This use of the land for these purposes by Mr and Mrs X declined over the years for various reasons including ill-health and ceased altogether approximately 30 years ago. Title to the Remaining Property transferred to the following beneficiaries of Mrs X deceased estate: ● Individual B ● Individual C ● Individual D ● Individual E On xx/xx/xxxx the Supreme Court of an Australian state made an order pursuant to section 126(1) of the Property Law Act 1969 . The Court order provided for the sale of the Remaining Property whereby the solicitors for the plaintiffs shall have the conduct of the sale and be authorised to instruct a licensed real estate agent, settlement agent or auctioneer for that purpose. Title to the Remaining Property remains with the beneficiaries (Owners) as tenants in common until settlement. The Owners are not registered for GST and do not collectively carry on an enterprise. Individual E (You) are not registered for GST. You are a Director of ABC Pty Ltd as trustee for ABC Family Trust. You are also a Director of DEF Pty Ltd as trustee for DEF Family Trust. You are a participant in the self-managed superannuation fund of the XXXX Retirement Fund. The sale of your interest in the Remaining Property is neither connected to, nor in the course or furtherance of, the above enterprises you are associated with. Your intention is to sell the Remaining Property with proceeds to be distributed in accordance with the Court Order.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | Section 9-40 | Property Law Act 1969 Section 126(1)

Reasons for decision: Summary: Note: In this reasoning, unless otherwise stated, ● all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) ● reference material(s) referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au Section 9-40 provides that you are liable for GST on any taxable supplies that you make. Section 9-5 provides you make a taxable supply if: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with the indirect tax zone; and (d) you are 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. Given the facts of this c ase, the sale of your interest in the Remaining Property is not made in the course or furtherance of an enterprise that you carry on. Furthermore you are neither registered nor required to be registered for GST. Therefore you have not made a taxable supply and are not liable for GST pursuant to section 9-40.