Private ruling: GST and sale of property
Published: February 2015

Ruling: Q1: Was your sale of the property a taxable supply? | A1: No | Q2: If the answer to question 1 is yes, was the supply eligible for the margin scheme? | A2: Not necessary to answer.

Relevant facts and circumstances: You, Mr and Mrs X, jointly purchased two adjoining properties in Victoria in yyyy. The properties were:- • Property 1 - one large block with the shed. The shed is xx years old. • Property 2 - a strip of land fronting the street The margin scheme was not applied to the supply of the property to you. Mr X used the shed on Property 1 as a workshop for his business. You also used it for storage. Property 1 was registered for GST at the time of purchase and at the time of sale. The partnership of Mr and Mrs X has never been registered for GST. In mmyyyy, you decided to make some improvements to Property 1, with a view to eventually renting the property as short-term holiday rental. Plans were approved on ddmmyyyy which allowed you to: • add internal walls to create bedrooms and a bathroom • add a kitchen/dining room and lounge room The project was completed around mmyyyy at a cost of about $xx. The garage/storage area was unchanged during this time and Mr X continued to use this area for his business. You bought furniture and tried to rent the converted shed as short term holiday rental. However, this was not successful. You then decided to sub-divide Property 1 with a view to selling the shed/residence on a smaller land area. The cost of the sub-division was about $x. The new title comprising the shed/residence was listed for sale and was sold in mmyyyy. You continue to hold the balance of the vacant land from Property 1 and Property 2.

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 23-5 | A New Tax System (Goods and Services Tax) Act 1999 section 188-10 | A New Tax System (Goods and Services Tax) Act 1999 section 188-25