Private ruling: GST - sale of residential premises
Date of advice: 19 September 2022
Published: December 2022
Ruling period: 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the sale of the property located in the indirect tax zone, known as X (Property 1), an input taxed supply of residential premises under section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. The sale of the property will be an input taxed supply of residential premises pursuant to section 40-65. Therefore, GST will not be payable on the sale. | Q2: Is the sale of the property located in the indirect tax zone, known as X (Property 2), an input taxed supply of residential premises under section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A2: Yes. The sale of the property will be an input taxed supply of residential premises pursuant to section 40-65. Therefore, GST will not be payable on the sale.

Relevant facts and circumstances: Entity B is the corporate trustee of Entity A. Entity A (You) have been registered for GST since DD/MM/YYYY. You are carrying on a leasing enterprise of residential properties. You are in the process of selling the following properties (the Properties) to X (the Purchaser): Property address 1 Property 1 2 Property 2 Further details in relation to the Properties in the above table: (1) Property 1 • You acquired the property located in the indirect tax zone (Property 1) on DD/MM/YYYY. • The property was not acquired as a taxable supply. • The property is a residential dwelling that contains X bedrooms, X bathrooms, a kitchen, X dining rooms, a family room, a living room and X car spaces on Xm² of land. • Since acquiring the property, it has been leased as residential premises. • A Residential Tenancy Agreement was entered into for a fixed term of X weeks starting DD/MM/YYYY and ending DD/MM/YYYY, for rent payable of $X per week. The agreement continued as a periodic agreement once the fixed term ended. • The executed Sales Contract dated DD/MM/YYYY provides that: o the supply to the Purchaser is subject to existing tenancies o the sale is not a taxable supply o the margin scheme will not apply o the sale is input taxed because the sale is of eligible residential premises (sections 40-65, 40-75(2) and 195-1) o the supply of the property will be for consideration of $X. (2) Property 2 • You acquired the property located in the indirect tax zone (Property 2) on DD/MM/YYYY. • The property was not acquired as a taxable supply. • The property is a residential dwelling that contains X bedrooms, X bathrooms, a kitchen, living room, family room, dining room and X car spaces on Xm² of land. • Since acquiring the property, it has been leased as residential premises. • A Residential Tenancy Agreement was entered into for a fixed term of X months starting DD/MM/YYYY and ending DD/MM/YYYY for rent payable of $X per week. The agreement continued as a periodic agreement once the fixed term ended. • The executed Sales Contract dated DD/MM/YYYY provides that: o the supply to the Purchaser is subject to existing tenancies o the sale is not a taxable supply o the margin scheme will not apply o the sale is input taxed because the sale is of eligible residential premises (sections 40-65, 40-75(2) and 195-1) o the supply of the property will be for consideration of $X. The Development Application On DD/MM/YYYY, a Development Application (DA) was lodged with the Local Council for demolition works and construction of a mixed use multi storey development. The DA includes all properties referred to in Schedule 2 (the Adjoining Properties), which includes Property 1 and Property 2. See Appendix A. You and the other landowners of the Adjoining Properties subject to the DA engaged a town planner, X, who prepared, compiled, lodged and negotiated the DA on the landowner's behalf. The DA was the subject of an extensive Pre-DA process with Council which commenced in YYYY. The DA was approved in MM/YYYY. The primary purpose for lodging the DA was to enhance and improve the sale prospects of the land and increase the realisable value of all lots. You and the other landowners of the Adjoining Properties subject to the DA considered undertaking the development as per the DA; however, this did not eventuate. The Contracts of Sale In MM/YYYY, a representative of the Purchaser made contact with a local Real Estate Agent to enquire about purchasing the Adjoining Properties. The Vendors in Schedule 2 and the Purchaser proceeded to negotiate their respective sales of property. On DD/MM/YYYY, you entered into Sales Contractswith the Purchaser for the sale of the Properties. The date for completion of each Sales Contract is X months after the contract date. The Purchaser has been registered for GST since DD/MM/YYYY with ABN XX XXX XXX XXX. You and the Purchaser are not associates. The completion of the Sales Contracts is subject to and conditional upon the simultaneous completion of the sale of the Adjoining Properties. Clauses X - X in the Sales Contracts provide: X Simultaneous Completion of Contracts X.X Completion of this Contract is subject to and conditional upon the simultaneous completion of the sale of the properties referred to in Schedule 2 hereto. X.X Should completion of any one or more of the properties in Schedule 2 not be completed simultaneously with the completion with the sale and purchase of the other properties referred to in Schedule 2 hereto the Vendor will be entitled to delay completion of this Contract until simultaneous completion of all of the sale and purchase Contracts of all of the properties in Schedule 2 is able to be effected. X Assignment of Rights, Title and Interest X.X Upon completion the Vendor will assign all of its right, title and interest in Development Application DA/11/20XX together with any and all copyright and all documentation relating to the property including, without limitation, plans, drawings and reports obtained by or commission by the Vendor or anyone on the Vendor's behalf to the Purchaser. ... You will not demolish or develop anything on the Properties prior to settlement. APPENDIX A Schedule 2 to the Contract for Sale and Purchase of Land Between Entity B atf Entity A AND the Purchaser.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 40-65 | A New Tax System (Goods and Services Tax) Act 1999 Section 40-75 | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1