Private ruling: GST and the supply of residential property
Published: March 2015

Ruling: Q1: Will the supplies of the properties be taxable supplies? | A1: No The supply of Property 1 is an input taxed supply of residential premises that is neither new residential premises, nor commercial residential premises. Therefore, Entity A's supply of the premises will not be a taxable supply. The supply of Property 2 is an input taxed supply of residential premises that is neither new residential premises, nor commercial residential premises. Therefore, Entity B's supply of the premises will not be a taxable supply. The supply of Property 3 is not a supply of an asset that is made in the course of an enterprise as it is Entity B's private residence. Therefore, Entity B's supply of the premises will not be a taxable supply.

Relevant facts and circumstances: Entity A owns a residential property located in Australia. Entity A lived in Property 1 until mmyy. It has been rented out since then. Entity B owns 2 residential properties - Property 2 and Property 3. Entity B lived at Property 2 from mmyyyy until mmyyyy. From mmyyyy, Entity B has lived at Property 3. Property 2 has been rented out since then. Entity A and Entity B received development approval for construction of x townhouses across all three properties. Entity A and Entity B have established a company to carry out the development. Entity A and Entity B will transfer the three properties to the company, at market value. No development will be undertaken prior to the transfer of the properties to the company.

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 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