Private ruling: Goods and services tax (GST) and property
Date of advice: 13 January 2016
Published: March 2016

Ruling: Q1: Are you required to be registered under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act)? | A1: No, you are not required to be registered under section 23-5 of the GST Act, because your GST turnover does not meet the registration turnover threshold

Relevant facts and circumstances: You are not registered for GST. You bought specified property. The property had a house on it which you rented out for specified months. You planned to demolish the house and build a duplex. You have never built before. You wanted to build a family home and have an investment property that would help you meet your living expenses. You were going to live in one half (ie A) of the duplex and rent out the other half (ie B) of the duplex. You completed construction in specified year but the build has cost you $200,000 to $300,000 more than originally expected. You have found a tenant for part B of the duplex. However, you are experiencing financial difficulties in sustaining loan repayments in view of the cost overrun. You cannot afford to keep part B of the duplex and are looking to sell that part of the duplex. The expenses to demolish the old home and build the duplex were paid from your joint bank account. The rental income is paid into your joint bank account. You currently cannot afford to fully complete the subdivision of the property which is still on one title. If you can find a buyer then you can enter into a contract to supply part B of the duplex subject to a fully completed subdivision and a draft strata plan. On finding a buyer you can then raise the funds necessary to create specified property (say). You do not carry on any other enterprise. You have not bought nor sold any other investment properties in the past.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 section 72-5 | A New Tax System (Goods and Services Tax) Act 1999 subsection 188-10(1) | A New Tax System (Goods and Services Tax) Act 1999 section 188-25