Private ruling: Goods and services tax (GST) and sale of property
Date of advice: 11 November 2016
Published: March 2017

Ruling: Q1: Will you be required to be registered for GST when you sell the property at the specified address? | A1: No | Q2: Will GST be payable on your sale of the property? | A2: No. GST is payable on a taxable supply if it meets all the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). One of the requirements of section 9-5 of the GST Act is that you are either registered or required to be registered for GST (paragraph 9-5(d) of the GST Act). Section 23-5 of the GST Act provides that you are required to be registered for GST if: ● you are carrying on an enterprise, and ● your GST turnover meets the registration turnover threshold of $75,000 ($150,000 for non-profit bodies) Section 188-10 of the GST Act provides that your GST turnover meets the registration turnover threshold if: ● your current GST turnover is $75,000 or more and the Commissioner is not satisfied that your projected GST turnover is below $75,000, or ● your projected GST turnover is $75,000 or more. However, when calculating your projected GST turnover, section 188-25 of the GST Act requires you to disregard any supply made, or likely to be made, by you by way of transfer of ownership of a capital asset. Accordingly, the proceeds from the sale of your property will not be included when calculating your projected GST turnover. You advised that your rental income is less than $75,000 per annum and you do not carry on any other enterprise. Therefore, the sale of the property is not a taxable supply as you are not registered or required to be registered for GST. You are not liable to pay GST on the sale of the property.

Relevant facts and circumstances: You are not registered for GST. You own a commercial property at the specified address. You have owned the property for many years. You have leased out the property on a regular basis and for continuous periods during your period of ownership. The rental income from the property was below the current registration turnover threshold of $75,000. The last tenant vacated the property some time ago. You then tried to find a new tenant, but as you did not receive any genuine inquiries, you decided to sell the property. The property is now vacant and you will sell the property with vacant possession. You will not seek a new tenant for the property between now and when you sell the property. The auction date will be a specified date. The property will be sold for a price above the registration turnover threshold. You do not carry on any other enterprise and you have no plans to do so. This is the only property you have ever owned. You will cease to operate once the property in question is sold.

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 paragraph 23-15(1)(b) | A New Tax System (Goods and Services Tax) Act 1999 Division 188