Private ruling: GST - sale of property
Date of advice: 14 November 2025
Published: 5 January 2026
Ruling period: 1 July 2025 to 30 June 2026
Date scheme commenced: 1 July 2025

Ruling: Q1: Are you considered to be conducting an enterprise for the purpose of section 9-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) in relation to the proposed sale of xxxx (the Property)? | A1: No. You are not considered to be conducting an enterprise under section 9-20 of the GST Act in relation to the proposed sale of the Property. | Q2: Is the sale of the Property considered to be made in the course or furtherance of the leasing enterprise carried on by you as a sole trader, within the meaning of section 9-5(b) of the GST Act? | A2: No. The sale of the Property is not considered to be made in the course or furtherance of the leasing enterprise carried on by you. | Q3: Is the sale of the Property by you, considered a taxable supply subject to GST in accordance with section 9-5 of the GST Act? | A3: No. The sale of the Property by you is an input taxed supply of residential premises under section 40-65 of the GST Act. | Q4: If the disposal of the Property is considered to be made in the course of or furtherance of the leasing enterprise (as contemplated in Question 2) or for any other identified enterprise carried on by you, will this be limited to the portion of the Property that reasonably relates to the shed and the immediately surrounding area? | A4: N/A. The sale of the Property by you is not considered to be made in the course of or furtherance of your leasing enterprise that you carry on. | Q5: Will the remaining portion of the Property not covered by Question 4, including the uncleared land, satisfy the definition of 'residential premises'contained in section 195-1 of the GST Act and be treated as an input taxed supply pursuant to section 40-65 of the GST Act? | A5: Yes. The sale of the Property by you would be considered an input taxed supply of residential premises under section 40-65 of the GST Act. | Q6: If the uncleared land on the Property is not included as part of the 'residential premises', will it be excluded as a taxable supply on the basis that it is not part of the furtherance of the leasing enterprise or any other identified enterprise (if any) conducted by you? | A6: N/A. The Property satisfies the definition as a 'residential premises' under section 195-1 of the GST Act and will be treated as an input taxed supply of residential premises under section 40-65 of the GST Act.

Relevant facts and circumstances: You are the sole owner of xxxx (the Property). The two lots together total approximately xxxx hectares and are currently zoned "Residential" under the xxxx Council planning scheme. Your parents acquired the Property in xxxx. Parent B passed away in xxxx and you inherited the Property on Parent A's death in xxxx. The Property contains: • A dwelling (house) which served as your main residence since xxxx. • Surrounding uncleared land which has been used by you for personal enjoyment and the benefit of your family. • A large shed (approximately xxxx floor area), constructed in xxxx and expanded in xxxx by Parent B. The shed straddles the boundary between the two lots. Although the Property consists of two separate lots, there is no physical division between them (i.e. no fence), except for the boundary shown on the surveyor's map and for all intents and purposes it has been utilised as one site. The Property has remained within your family since its acquisition. In xxxx, ownership of the Property was transferred to you (individually) as part of your inheritance from Parent A's estate. The Property was your main residence from xxxx until xxxx (which includes a period before and after you formally inherited it). Thus, for approximately xxxx years, the Property has been used as a private home for you and your family. In xxxx, you relocated your primary residence from the xxxx Property to the dwelling situated on xxxx (the New Primary Residence). The New Primary Residence is separate to the Property. It was purchased by Parent A in xxxx and has not formed part of the Property. Since inheriting the Property, you have held it as a long-term private capital asset. The shed located on the Property, was utilised by xxxx as trustee for xxxx (the Trust), a related entity. The Trust was established on xxxx, with Parent A and Stepparent A, listed as primary beneficiaries. Stepparent A passed away in xxxx. You have been a director of the Trust since xxxx. The shed has deteriorated since the Trust vacated in xxxx. While it remains structurally intact and technically suitable for occupation (electricity and water are still connected), it requires significant repairs (replace broken windows and a thorough clean) before it can be reoccupied. While using the shed, the Trust was not charged rental fees nor did you and the Trust enter into a formal lease agreement relating to the use of the premises. The Trust's use of the shed was provided gratis. You received no consideration or income from this arrangement at any point as the arrangement was not profit-motivated. You have not derived any rental income from the Property over the ownership period. Accordingly, you did not register for GST nor submit any Business Activity Statements (BAS) in connection with the Property. As the Property has not generated income, you have not claimed any GST input tax credits (ITCs) or income tax deductions for property-related expenses. All outgoings relating to the shed have historically been, and continue to be, paid by the Trust. Notably, electricity and water charges are separately metered for the shed. Currently, water costs are minimal, as they largely pertain to the connection due to the shed's vacancy. Additionally, for completeness, it should be noted that the Trust has paid and continues to pay council rates. The Trust did not make any capital improvements to the premises while it utilised the shed. In xxxx, you inherited another property located in xxxx (the Commercial Property). The Commercial Property has been leased, generating gross rental income exceeding $75,000 per annum, since xxxx. On xxxx, you registered for GST as a sole trader in relation to the commercial leasing enterprise operated in relation to the Commercial Property (the leasing enterprise) and have continued to submit regular BAS for this enterprise. Aside from the Commercial Property, you do not own any of the other properties in your personal capacity. Since inheriting the Property in 2003, you have maintained it as a private capital asset, with no active development or intention to sell. The property has not been subdivided, redeveloped, or improved for sale purposes. Approval was obtained in xxxx to adjust the boundaries, however no action was taken by you and the approval has since lapsed. Other than routine maintenance of the residence and the historic shed constructed by your parents, no development activities such as rezoning, construction of additional dwellings, or significant land improvements have been undertaken by you on the Property. The Property has been offered for sale in its present condition on an as-is basis. The decision to sell the Property was driven by personal circumstances, notably due to your age and desire to downsize and simplify your affairs (no longer wishing to maintain such a large property). This is demonstrated by your relocation to the New Primary Residence being a smaller lot. The sale contract was entered into on xxxx with an unrelated party for the disposal of the Property. As part of the sale, a separate put and call option deed was entered into with a condition of the deed (Clause 12) requiring that you obtain a binding ruling or class ruling from the ATO in relation to the GST implications of the sale (if any). You will receive the proceeds from the sale of the Property in a personal bank account, unrelated to any business bank account associated with the leasing enterprise or related entities.

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 195-1

Reasons for decision: Detailed Reasoning - Question 1 & 2: Section 9-20 of the GST Act defines 'enterprise' to include, amongst other things, an activity or series of activities done: • in the form of a business • in the form of an adventure or concern in the nature of trade • on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property. The term 'carrying on an enterprise' is defined in the GST Act and includes doing anything in the course of the commencement or termination of the enterprise. However, section 9-20(2) of the GST Act provides that certain activities are excluded from being an enterprise, even if they might otherwise fall within the above definition, as outlined below. a) Activities as an employee or other PAYE earner (unless it is done in supplying services as the holder of an office that the employee or PAYE earner has accepted in the course of or in connection with an activity or series of activities of the kind mentioned in subsection (1)) b) as a private recreational pursuit or hobby; or c) by an individual (other than a trustee of a charitable fund), or a partnership (all the members of which are individuals), without a reasonable expectation of profit or gain; or d) as a member of a local governing body established by or under a State law or Territory law (other than an eligible local governing body within the meaning of section 221A of the Income Tax Assessment Act 1936). You operate a leasing enterprise through leasing the Commercial Property; however it must be determined whether the sale of the Property is made in the course of or furtherance of that or a separate enterprise. The Explanatory Memorandum (EM) to the A New Tax System (Goods and Services Tax) Bill 1998 provides guidance at paragraph 3.10: "'In the course or furtherance' is not defined but is broad enough to cover any supplies made in connection with your enterprise. An act done for the purpose or object of furthering an enterprise, or achieving its goals, is a furtherance of an enterprise although it may not always be in the course of that enterprise. 'In the course or furtherance' does not extend to the supply of private commodities , such as when a car dealer sells his or her own private car." 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) considers the meaning of the terms 'entity' and 'enterprise' for the purposes of the A New Tax System (Australian Business Number) Act 1999 (ABN Act). The ABN Act uses the definitions of these terms that are contained in the GST Act. The principles in that Ruling apply equally to the terms 'entity' and 'enterprise' and can be relied upon for GST purposes. In relation to the words 'in the form of an adventure or concern in the nature of trade', paragraph 244 of MT 2006/1 states: 244. An adventure or concern in the nature of trade includes a commercial activity that does not amount to a business but which has the characteristics of a business deal. Such transactions are of a revenue nature. However, the sale of the family home, car or other private assets are not, in the absence of other factors, adventures or concerns in the nature of trade. The fact that the asset is sold at a profit does not, of itself, result in the activity being commercial in nature. The sale of the Property is a one-off transaction but the mere fact that a profit occurs is not enough. There are a number of factors to consider before the sale can amount to an enterprise. MT 2006/1 refers to the characteristics of trade, including the 'badges of trade'. The relevant of which including: • the subject matter of the realisation, • the length of time the asset is held • frequency of trading The Property has been in your possession since xxxx when you inherited it upon the death of Parent A. The Property was used as your primary residence for xxxx years before you relocated due to the need to downsize. This use of the Property represents a private and domestic purpose. This indicates that the Property is being sold as an investment rather than a trading asset which is discussed in MT 2006/1 at paragraph 247. Further, as it is a one-off sale, there is no evidence to suggest that it was purchased with the intention of sale with a profit. On the facts presented, you as an individual used the Property as a residence rather than in the course of the leasing enterprise that you carried on. Nor is the sale itself an adventure in the nature of trade. As you leased the shed to the Trust, it must be determined if that would be considered to be 'carried on in the course of or furtherance of an enterprise'. You allowed the Trust to utilise the shed, however, the Trust was not charged rental fees nor did you and the Trust enter into a formal lease agreement relating to the use of the premises. The Trust did not make any capital improvements to the Property while it utilised the shed. Instead, they paid for all outgoings relating to the shed historically. Paragraph 307 of MT 2006/1 states: 307. A gratuitous lease, licence or other grant of an interest in property made by an individual (other than a trustee of a charitable trust or a fund covered by item 2 of the table in section 30-15 of the ITAA 1997 or of a fund that would be covered by that item if it had an ABN) or a partnership where all or most of the partners are individuals will not, by itself, amount to an enterprise. It should have a commercial basis underlying it. This is because there needs to be a reasonable expectation of profit or gain for an enterprise carried on by an individual (other than a trustee of a charitable trust) or a partnership (where all or most of the members are individuals), see paragraph 9-20(2)(c) of the GST Act. However, where there is a reasonable expectation of profit or gain by the individual or partnership a gratuitous lease, licence or other grant of an interest in property may amount to an enterprise. You have advised that the shed was supplied on a continuous and regular basis to the Trust for use in its enterprise. The payments for the outgoings related to the shed are of nominal value and don't represent the value that could be obtained from leasing such a property on the open market. As such, there is no reasonable expectation of profit or gain by you with your decision to allow the Trust to use the shed having no commercial basis. This suggests that the activity is done by an individual without a reasonable expectation of profit or gain. Consequently, your activities do not amount to an enterprise. As such, the sale of the Property will not be made in the course or furtherance of an enterprise that you carry on. Accordingly, the sale of the Property will not satisfy the requirements of paragraph 9-5(b) of the GST Act. | Detailed Reasoning - Question 3: Section 9-5 of the GST Act sets out the requirements of a taxable supply and it states: 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; and d) you are *registered, or *required to be registered for GST. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (* denotes a term defined in section 195-1 of the GST Act.) It has been determined in the answer to Questions 1 and 2 that the sale of the Property is not being made in the course or furtherance of an enterprise that you carry on. Therefore, the sale will not satisfy the requirements under section 9-5 of the GST Act to be considered a taxable supply. | Detailed Reasoning - Question 5: For completeness, although the supply of the Property is not a taxable supply, section 40-65 of the GST Act would have applied: 1) A sale of * real property is input taxed, but only to the extent that the property is * residential premises to be used predominantly for residential accommodation (regardless of the term of occupation). 2) However, the sale is not input taxed to the extent that the * residential premises are: a) * commercial residential premises; or b) * new residential premises other than those used for residential accommodation (regardless of the term of occupation) before 2 December 1998. Section 195-1 of the GST Act defines residential premises as: "residential premises" means land or a building that: a) is occupied as a residence or for residential accommodation; or b) is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation; The Property satisfies the definition of residential premises under section 195-1 of the GST Act. Further to this, it is neither commercial residential premises nor new residential premises. Consequently, the sale of the Property would have been an input taxed supply of residential premises pursuant to section 40-65 of the GST Act.