Private ruling: GST - sale of property
Date of advice: 27 November 2024
Published: 13 January 2025
Ruling period: Financial year ending 30 June 20XX, to | Financial year ending 30 June 20XX.
Date scheme commenced: The date this private ruling is issued.

Ruling: Q1: Should the sale of the property have been subject to GST when sold? | A1: No. The sale of the property would not have been subject to GST at the time of sale, as all of the elements of section 9-5 were not satisfied. | Q2: If the sale of the property should have been a taxable supply, would the purchaser be entitled to claim input tax credits on the purchase? | A2: As the sale of the property would not have been a taxable supply there is no entitlement to claim input tax credits in relation to this purchase. | Q3: If the sale of the property should have been a taxable supply, is the vendor required to issue a tax invoice in relation to the sale? | A3: No. The vendor of the property is not required to issue a tax invoice as the supply of the property was not a taxable supply when sold.

Relevant facts and circumstances: On XX XXX XXXX, the Company purchased the property as vacant land. The company holds an Australian Business Number and is registered for GST from X XXXX XXXX. Prior to the sale of the property, an existing structure was demolished which had previously been used as a XXX shop. The date the structure was demolished is unclear. The contract of sale provides that the sale of the property was not subject to GST. The Australian Business Register (ABR) indicates that, at the time of the sale, the vendor of the property held an ABN but was not registered for GST.

Relevant legislative provisions: A New tax System (Goods and Services Tax) Act 1999 section 9-5

Reasons for decision: Summary: Under section 9-5, an entity makes a taxable supply where the supply: (1) is made for consideration; and (2) is made in the course or furtherance of an enterprise being carried on; and (3) is connected with the indirect tax zone; and (4) is made by a supplier who is 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. In this case, the property was sold for consideration and is located in the indirect tax zone. Therefore, the sale of the property satisfies two elements outlined above (1 and 3). Accordingly, we need to examine whether the other two elements (2 and 4) would be satisfied. The vendor of the property is an individual who holds an ABN but was not registered for GST at the time of the sale. There is no evidence that the vendor is required to be registered for GST in relation to the sale of the property and that the sale of the property was in the course or furtherance of an enterprise being carried on. Therefore, elements 2 and 4, as outlined above cannot be satisfied. As a result, all of the provisions of section 9-5 cannot be satisfied. | Detailed Reasoning - In conclusion: The sale of the property would not have been a taxable supply in accordance with section 9-5. As the supply of the property was not a taxable supply, the Company is not entitled to claim any input tax credits in relation to the purchase of the property and the vendor of the property is not required to issue a tax invoice.