Private ruling: GST and a major development project
Date of advice: 30 August 2016
Published: March 2017

Ruling: Q1: Is the supply of Land by one party to the other a supply of real property that is non-monetary consideration in return for entering into development obligations? | A1: Yes, the supply of land by one party to the other was non-monetary consideration in return for the other entering into development obligations. | Q2: Will the Commissioner exercise a discretion to allow a party to treat the contract of sale as a tax invoice to allow it to attribute its input tax credit on the acquisition of the supply from the other party to a particular tax period, being the same tax period in which the other parties' GST liability on the supply of the land is also attributable. | A2: Yes, the Commissioner will exercise a discretion to allow one party to treat the contract of sale of land as a tax invoice to allow it to attribute its input tax credit on the acquisition of the supply from the other party in the same tax period in which the counter party's GST liability on the supply of land is also attributable. | Q3: Is the one party making a supply of a right to develop? Does Division 81 or Division 82 apply to this supply to ensure it is not for consideration? | A3: Yes the entity is making a supply of the right to develop the land. Division 81 and 82 applies to ensure it is not for consideration. | Q4: Does the one party also make taxable supplies to the other to the extent that any monetary consideration is received for the supply of relevant space? | A4: Yes. The one entity makes taxable supplies to the other party to the extent that any monetary consideration is received for the supply. | Q5: Do any other GST liabilities arise under these arrangements other than in the case of any changes to the contractual arrangements, or default by a party under the contractual arrangements? | A5: No. No other GST liabilities arise under these arrangements other than in the case of any changes to the contractual arrangements, or default by a party under the contractual arrangements.

Relevant facts and circumstances: 1. One party is a government entity and the other is a corporate trustee. 2. Both parties account for GST on a non-cash basis. 3. The parties are at arm's length in relation to the agreements entered into to undertake the relevant development stages. 4. The relevant land was for use in the ongoing development. 5. As at the date of settlement, the full details of the exact development obligations were still being formulated as the development itself was constantly evolving. 6. A valuation for the land was provided.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 sections 9-10, 9-20, 81-10 and 82-5.

Reasons for decision: Summary: The contractual agreements establish a complex series of interrelated tasks to be completed as part of the overall multi-staged development. Characterisation of each potential supply becomes impossible on the facts of this case, with a complex web of related agreements, some provisions of which were abandoned, and some were provided outside the agreements as the development evolved. A common-sense approach needs to be taken on these facts. GSTR 2001/8 Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts points out that at paragraph 5A that it does not deal with the multiple supplies under a single transaction, but the principle of common sense characterisation of supplies advocated in that ruling still applies. The Decision impact statement in relation to Commissioner of Taxation v Reliance Carpet Co Pty Ltd says: The Commissioner will maintain his approach in GSTR 2001/8 that a 'common sense approach' and an 'overall view' should be taken where it is necessary to characterise a supply (see, in particular, paragraphs 19, 20 and 40 to 42 of that ruling).