Private ruling: GST registration and sale of property
Published: July 2012

Ruling: Q1: Are you (as trustee for a Statutory Trust) required to be registered for the goods and services tax (GST)? | A1: No. | Q2: Do you make a taxable supply when the real property subject to the statutory trust is sold? | A2: No.

Relevant facts and circumstances: Background Pursuant to a court order you have been appointed as statutory trustee (Trustee) for the purpose of selling real property subject to a dispute. The Order of the Court provides that the real property vests in you to be held as Trustee on statutory trust for sale. You are authorised to obtain a valuation of the land at any time after consultation with the parties. You are authorised to seek further directions of the court including ascertaining and adjusting the rights of the parties to the dispute. Prior to the Order, the Property was jointly owned by the applicants and respondent. The applicants and respondent are now beneficiaries of the Trust Estate under the Order. You have not carried on any business on the Property since the date of the court order. You currently do not have a tax file number (TFN) and have not applied for an Australian business number (ABN) and GST registration in respect of your activities as Trustee. Current request You are requesting a further private ruling on this matter as you have applied for (and received) a Court order allowing you to seek compensation in relation to the reinstatement of an easement over the property. You are also authorised to claim compensation for any disturbance suffered as a result of construction works on the easement. If compensation is agreed you will attempt to sell the property for market value. If compensation is not agreed you expect to receive an advance payment. You may appeal the quantum of that advance payment, or may accept it and attempt to sell the property for market value. You request a ruling to confirm that in these circumstances you are not required to be registered for GST and that you will not make a taxable supply when the property is sold.

Relevant legislative provisions: A New tax System (Goods and Services Tax) Act 1999 Section 9-5 | Section 9-20 | Section 23-5

Reasons for decision: Summary: As per our previous advice, you are not required to be registered for GST. | Detailed Reasoning - Detailed reasoning: Our previous ruling considered that you will make any supply of the property in question as, under the terms of the Court Order, you hold legal title to the property. However, we considered that your activities in relation to the property do not amount to the carrying on of an enterprise in relation to that property but are merely acting in accordance with the Court Order to dispose of the property and distribute the proceeds (after expenses) to the parties to the dispute. We consider that attempting to recoup as much as possible in relation to the property, for example by way of seeking compensation in relation to the easement, does not alter the view that you are not carrying on an enterprise in relation to the property. We consider that you are merely attempting to realise the full value of the asset. Under section 23-5 of the A New tax System (Goods and Services Tax) Act 1999 (GST Act). you are only required to be registered if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold. As we consider that you are not carrying on an enterprise in relation to selling the property in your capacity as trustee you are not required to be registered for GST for this activity. | Summary: As per our previous advice, you do not make a taxable supply when the relevant property is sold. | Detailed Reasoning - Detailed reasoning: Where you are not registered for GST you do not make taxable supplies (see paragraph 9-5(d) of the GST Act). Furthermore, as considered above, your activities in relation to the property do not constitute an enterprise. Therefore any supply of the property is not made in the course or furtherance of an enterprise that you carry on in your capacity as trustee. Therefore all of the paragraphs of section 9-5 of the GST Act are not met and any supply of the property will not be a taxable supply. Any compensation that may be received is not consideration for a supply of the property where this it is a separate transaction or arrangement. Where you are not registered for GST you do not make any other taxable supplies in relation to (or in exchange for) any compensation received as only registered entities acting in the course or furtherance of their enterprise make taxable supplies.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.