Private ruling: GST and sale of property
Date of advice: 19 December 2016
Published: May 2017

Ruling: Q1: Is your sale of the property a taxable supply? | A1: No. Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), 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 (Australia); and (d) you are registered or required to be registered. In this case, a title search shows the title of the Property is in the name of an individual (and not in joint names). You did not acquire the Property in your capacity as a partner in a partnership. Furthermore, you entered into the call option agreement as an individual and not in your capacity as a partner of a partnership, with the subsequent sale made by you as an individual. Your activities are not in the course or furtherance of an enterprise that you carry on and you are not registered or required to be registered. As such your sale of the Property does not satisfy all the requirements of a taxable supply under section 9-5.

Relevant facts and circumstances: You purchased property (the Property) in the 1960's. You are not registered for GST as an individual. The Property contains your and your spouse's principal place of residence. The residence was constructed prior to 199X. The Property is also used in the operation of an ABC business by you and your spouse as a GST registered partnership. The Partnership has operated the ABC since 1980 (approximately). The Property is not included in the assets of the Partnership however the Partnership assets do include improvements such as fixtures and some plant and motor vehicles. A number of outgoings related to the Property were expensed in the books of the Partnership on the following proportionate basis: ● Council rates - 50% ● Electricity - 60% ● Water - 80% ● Phone - 40% You do not receive rent and have never received rent or any other payment from the Partnership for the use of the Property. There is no written lease agreement. In 201X you entered into an agreement granting a land developer (Developer) a call option (Call Option Deed) to purchase the Property. The Call Option Deed provides that you must maintain the Property (excluding any improvements on the Property and any inclusions) in substantially the same condition as it is as at the date of entering the agreement until such time the call option expires or the contract of sale is completed (whichever is the latter). You did not market the Property for sale prior to negotiating the call option with the Developer. You were approached by the Developer with an offer to purchase the Property. You have not and will not undertake any activities preparatory to development of the Property before completion of the sale if the option is exercised. The Developer does not intend to continue operation of the ABC business. The Developer intends to develop the site for residential dwellings. If the call option is exercised, the Partnership will cease operation of the ABC business prior to the completion of the sale. A title search show the title is in the name of you (an individual).

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 9-40 | A New Tax System (Goods and Services Tax) Act 1999 Section 184-1 | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1