Private ruling: GST and the sale of residential premises
Date of advice: 16 February 2026
Published: 7 April 2026
Ruling period: XX/XX/20XX to XX/XX/20XX
Date scheme commenced: XX/XX/20XX

Ruling: Q1: Will you make a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you sell Unit Y? | A1: No. You will not make a taxable supply under section 9-5 of the GST Act when you sell Unit Y because you are not registered for GST and you are not required to be registered for GST.

Relevant facts and circumstances: You do not have an active ABN registration and are not registered for GST. You received a tailored strategy report which modelled a long-term buy-and-hold leasing strategy. After receiving the report, you entered into an expression-of-interest for a house-and-land package (Site A). Construction at Site A commenced but experienced cost increases and delays that pushed completion past the expected completion date. You separately contracted to acquire land at Site B. You constructed two residential premises (Unit X and Unit Y) at Site B. Original completion timing and costs were not met due to external factors. Site B was subdivided into two freehold units. Both Unit X and Unit Y were leased after construction was completed. Construction was funded with an investment loan and later refinanced with another lender. Interest rates increased during the construction period. The projected positive cash flow in the strategy report did not eventuate. You experienced a loss position. You intend to sell Unit Y. You have not bought land and built premises in the past 10 years other than the premises above.

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 23-5 | A New Tax System (Goods and Services Tax) Act 1999 section 23-15 | A New Tax System (Goods and Services Tax) Act 1999 section 40-35 | 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 188-10 | A New Tax System (Goods and Services Tax) Act 1999 section 188-20 | A New Tax System (Goods and Services Tax) Act 1999 section 188-25 | A New Tax System (Goods and Services Tax) Regulations 2019 section 23-15.01

Reasons for decision: Summary: A supply is taxable under section 9-5 of the GST Act 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. You will satisfy subsections (a) and (c) of section 9-5 of the GST Act because you will receive consideration when you sell Unit Y and the supply will be connected with Australia. No GST-free provision applies. The sale will be a supply of new residential premises within the meaning of section 40-75 of the GST Act and therefore will not be input taxed under section 40-65 of the GST Act. As such, we need to address whether the sale will be made in the course or furtherance of an enterprise that you carry on, and whether you are registered, or will be required to be registered for GST at the time of sale. | Detailed Reasoning - Course or furtherance of an enterprise: A supply must be made in the course or furtherance of an enterprise that you carry on for it to be taxable under section 9-5 of the GST Act. Under section 9-20 of the GST Act, an enterprise includes activities done in the form of a business, an adventure or concern in the nature of trade, and activities done on a regular or continuous basis in the form of a lease. Our views on the meaning of 'carrying on an enterprise' are outlined in Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number (MT 2006/1). While MT 2006/1 concerns the Australian Business Number framework, those views apply equally for GST purposes through Goods and Services Tax Determination GSTD 2006/6 Goods and services tax: does MT 2006/1 have equal application to the meaning of 'entity' and 'enterprise' for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 . Paragraphs 170 to 176 of MT 2006/1 explain that the phrase 'in the form of a business' widens the enquiry to the commercial character of the activities, assessed by weighing factors such as purpose, intention, organisation, scale, repetition, and whether the activities resemble ordinary trade practices. Paragraphs 234 and 244 of MT 2006/1 confirm that isolated transactions may constitute an adventure in the nature of trade, but that the mere presence of a profit does not, of itself, give the activities a business character. Paragraph 265 of MT 2006/1 sets out factors relevant to determining whether a one-off real property transaction has a business or trading character, including whether the use or purpose of land changes, whether additional land is acquired, whether borrowed funds are used, whether a subdivision plan exists, and whether development exceeds what is necessary to secure council approval. In your case, you undertook acquisition and construction activities across investment properties over multiple years. You obtained a tailored strategy report, subdivided Site B, constructed two dwellings, leased both units upon completion, and intend to sell only one unit. Some features of these activities are consistent with an enterprise and may resemble development activity, but they are not determinative. You carried on an enterprise of leasing in relation to Unit X and Unit Y. You acted consistently with a long-term tailored strategy report, you obtained tenants following construction completion, and you funded construction through borrowings and subsequent refinances. Your intention to sell Unit Y arose from external factors increasing costs that changed a projected positive cash flow into a loss-making position. The sale was not contemplated at the time of acquisition and was not undertaken as part of a profit-making plan. Although the premises are new residential premises, the consistent leasing intention and conduct, and the absence of a broader or ongoing development program, weigh against characterising your activities as a property development enterprise or an adventure in the nature of trade. The proposed sale represents the realisation of a capital asset of your leasing enterprise. The sale of Unit Y is a realisation of a capital asset of your leasing enterprise, rather than a transaction undertaken in the course of a property development enterprise. | Detailed Reasoning - Registered or required to be registered for GST: A supply is only taxable under section 9-5 of the GST Act if you are registered, or required to be registered, for GST. You are not registered and you have never been registered. Under section 23-5 of the GST Act, you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration threshold under section 188-10 of the GST Act. The registration threshold is $75,000, as provided in section 23-15 of the GST Act and regulation 23-15.01 of the A New Tax System (Goods and Services Tax) Regulations 2019 . Under subsection 188-25(a) of the GST Act, supplies made by way of the transfer of ownership of a capital asset are disregarded when working out your projected GST turnover. As Unit Y is a capital asset of your leasing enterprise, the proceeds of its sale will be disregarded for the purposes of projected GST turnover under section 188-20 of the GST Act. Your other supplies consist of residential rent, which is input taxed under section 40-35 of the GST Act and therefore not included in your GST turnover. Your GST turnover will not meet the registration threshold at the time of sale. You are not required to be registered for GST. | Detailed Reasoning - Conclusion: You will not make a taxable supply under section 9-5 of the GST Act when you sell Unit Y because you are not registered for GST and you are not required to be registered for GST.