Private ruling: GST and Property
Date of advice: 15 June 2017
Published: October 2017

Ruling: Q1: Is the supply of your property a taxable supply, under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 ? | A1: No.

Relevant facts and circumstances: You are not registered for GST. In 20XX, you purchased the Property which consisted of x hectares, a small house, shed, tank and fences. You did not claim GST on the purchase of the Property. You built a house on the Property. You did not claim any GST credits in relation to the house or its associated expenses. You live on the Property and operated a business on the Property. You were previously registered for GST which was cancelled, as your turnover is below $75,000. In the course of setting up your business you claimed GST on some purchases. These items have now been sold and GST was remitted. You have claimed GST credits for business expenses. You have remitted GST on your sales. You have now sold all the items.

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 Subsection 40-65(1) | A New Tax System (Goods and Services Tax) Act 1999 Section 188-10 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 188-10(2) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 188-25(a), and | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.

Reasons for decision: Summary: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if: a) you make the supply for consideration b) the supply is made in the course or furtherance of an enterprise that you carry on c) the supply is connected with the indirect tax zone (Australia), 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. On the facts supplied, paragraphs 9-5(a) and 9-5(c) of the GST Act will be satisfied. Further, the supply of the Property would be partly input taxed under section 40-65 of the GST Act to the extent that the Property is residential premises. | Detailed Reasoning - Enterprise: The term 'carrying on an enterprise’ is defined in the GST Act as including doing anything in the course or the commencement or termination of the enterprise. You were carrying on an enterprise on the Property. You have sold all the items. You have cancelled your GST registration as your turnover was below $75,000 and have decided to sell your Property. Paragraph 9-5(b) will be satisfied as in terminating your enterprise you are disposing of the Property on which you operated your enterprise. As the sale proceeds of the Property will exceed the $75,000 GST turnover threshold, we need to determine if you are required to be registered for GST. | Detailed Reasoning - Registration: Section 23-5 of the GST Act provides that you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold (currently $75,000). Under section 188-10, your GST turnover is calculated with reference to your current GST turnover and your projected GST turnover. As provided in subsection 188-10(2), your GST turnover does not exceed a particular threshold if: ● your current GST turnover is at or below the turnover threshold, and the Commissioner is not satisfied that your projected GST turnover is above the turnover threshold, or ● your projected GST turnover is at or below the turnover threshold. As your current GST turnover from the enterprise is below $75,000 of relevance is your projected GST turnover. In working out your projected GST turnover, paragraph 188-25(a) of the GST Act requires you to disregard any supply made, or likely to be made, by you by way of transfer of ownership of a capital asset of yours. Based on the information provided, the sale of the Property will be excluded from the calculation of your GST turnover because it will be a transfer of a capital asset. As a result you do not meet the registration turnover threshold and you are not required to be registered for GST. | Detailed Reasoning - Conclusion: Therefore, as you are not registered and are not required to be registered for GST, the sale of the Property will not be a taxable supply under section 9-5 of the GST Act and will not be subject to GST.