Private ruling: GST and required to be registered
Date of advice: 31 January 2018
Published: June 2018

Ruling: Q1: Is the sale of the property a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), by the Partnership? | A1: No. As the Partnership is not registered or required to be registered for GST the supply of the property will not be a taxable supply.

Relevant facts and circumstances: The Partnership has rented out the property. The property contains two shops downstairs and upstairs two residential premises. The annual rental from the shops is $xxx. The Partnership is not carrying on any other activities under the Partnership and will be wound up after the sale of the property. The Partnership is not registered for GST and will cancel the ABN after the sale of the property.

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 23-5, | A New Tax System (Goods and Services Tax) Act 1999 section 188-10, and | A New Tax System (Goods and Services Tax) Act 1999 section 188-25.

Reasons for decision: Summary: A supply is taxable where it satisfies all the paragraphs under section 9-5 of the GST Act. The section provides that: 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. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. In the Partnerships situation paragraphs 9-5(a) to (c) of the GST Act will be met as in supplying the property for sale the Partnership will make a supply for consideration, the supply will be made in the course of an enterprise the Partnership carries on and the supply is connected with the indirect tax zone as it is done in Australia. However, paragraph 9-5(d) will not be met as the Partnership is not registered for GST and would not be required to be registered for GST. The reason the Partnership is not required to be registered for GST under section 23-5 of the GST Act is because it does not satisfy the GST turnover threshold. Subsection 188-10 (2) of the GST Act provides that you have a GST turnover that does not exceed a particular turnover threshold if your current GST turnover is at or below the turnover threshold, and the Commissioner is not satisfied that your projected GST turnover is above the turnover threshold. In this circumstance the Partnerships current turnover is below the turnover threshold and the Commissioner is not satisfied that your projected GST turnover is above the turnover threshold due to the operation of section 188-25 of the GST Act that disregards as part of the projected GST turnover the supply of the transfer of a capital asset solely as a consequence of ceasing to carry on an enterprise. Therefore, the Partnership will not make a taxable supply when selling the property.