Private ruling: Goods and services tax (GST) and leasing out a facility
Published: February 2013

Ruling: Q1: Will the rental income from leasing out the facility be included in the calculation of GST turnover for the purposes of determining whether you are required to be registered for GST? | A1: Yes.

Relevant facts and circumstances: You operate a business, which operates from a facility that is located at your principal place of residence. Your principal place of residence is a (number) acre rural-residential property located in Australia. The area is predominantly rural-residential. You have a purpose-built facility of approximately something. The facility is a separate building to your residence, but shares common utilities. The facility is council -approved and has certain features. All buildings are on the same piece of land, which is on a single title, of which you are the sole owner. You do not regularly use all parts of the facility, and you wish to lease out around (fraction) to another operator. The other operator will use the facility to carry on its business activities. The other operator will be a separate entity and have its own customers and be responsible for the work involved in operating its business. The facility will be leased to the other operator on a something basis at a rate yet to be negotiated. There will be a lease agreement in place between you and the lessee.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-20(1)(a) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-20(1)(c) | A New Tax System (Goods and Services Tax) Act 1999 section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 subsection 40-65(1) | A New Tax System (Goods and Services Tax) Act 1999 Division 188 | A New Tax System (Goods and Services Tax) Act 1999 subsection 188-10(1) | A New Tax System (Goods and Services Tax) Act 1999 subsection 188-15(1) | A New Tax System (Goods and Services Tax) Act 1999 subsection 188-20(1)

Reasons for decision: Summary: The rental income is included in the calculation of GST turnover because leasing out the facility is · a supply made for consideration · not an input taxed supply, and · a supply made in connection with you an enterprise that you carry on, and none of the exclusions apply. | Detailed Reasoning - Detailed reasoning: Section 23-5 of the GST Act provides that an entity is required to be registered for GST if: (a) the entity is carrying on an enterprise; and (b) its GST turnover meets the registration turnover threshold of $75,000. Subsection 188-10(1) of the GST Act states: You have a GST turnover that meets a particular *turnover threshold if: (a) your *current GST turnover is at or above the turnover threshold, and the Commissioner is not satisfied that your *projected GST turnover is below the turnover threshold; or (b) your projected GST turnover is at or above the turnover threshold. Subsection 188-15(1) of the GST Act provides that an entity's current GST turnover at a time during a particular month is the sum of the values of all the supplies that the entity has made, or is likely to make, during the 12 months ending at the end of that month, other than: (a) supplies that are input taxed (b) supplies that are not for consideration (c) supplies that are not made in connection with an enterprise that you carry on. Subsection 188-20(1) of the GST Act provides that an entity's projected GST turnover at a time during a particular month is the sum of the values of all the supplies that the entity has made, or is likely to make, during that month and the next 11 months, other than: (a) supplies that are input taxed (b) supplies that are not for consideration (c) supplies that are not made in connection with an enterprise that you carry on. Leasing out the facility is a supply. These supplies will have value because you will receive consideration (the rent) for these supplies. Leasing out the facility is not an input taxed supply of residential premises or any other type of input taxed supply. An enterprise includes: · an activity or series of activities done in the form of a business (in accordance with paragraph 9-20(1)(a) of the GST Act), and · an activity or series of activities done on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property (in accordance with paragraph 9-20(1)(c) of the GST Act). Your business is an enterprise under paragraph 9-20(1)(a) of the GST Act. Leasing out the facility is part of your business. It would also be an enterprise under paragraph 9-20(1)(c) of the GST Act if you lease out the facility on a regular or continuous basis. Therefore, leasing out the facility is a supply that is made in connection with an enterprise that you carry on. None of the exclusions from the calculation of GST turnover set out in Division 188 of the GST Act apply. Therefore, the rental income from leasing out some of the facility is included in the calculation of your GST turnover for the purposes of determining whether you are required to be registered for GST.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.