Private ruling: GST and sale of property
Date of advice: 26 September 2025
Published: 17 November 2025

Ruling: Q1: Will your supply of the property that had been used as a meeting place and exhibition venue, a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, in part. Your supply of the property is a mixed supply as follows: a) to the extent of the main building, your supply is a taxable supply, and b) to the extent of the former church hall, your supply is input taxed. In this regard, you have to apportion the consideration you received accordingly. You can use any reasonable method to calculate the value of the taxable component of the supply.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You purchased a property that is comprised of two buildings, a main building and another smaller building behind the main building (the Property). You used the main building as a community facility to display significant items and art works. You sold the Property and marketed the sale of the Property as suitable for residential and commercial use.

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 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 9-80 | A New Tax System (Goods and Services Tax) Act 1999 section 40-65 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Summary: Unless otherwise stated, • all legislative references are to the GST Act • all reference materials published by the ATO that are referred to are available on the ATO website at: www.ato.gov.au Section 9-40 provides that you are liable for GST on any taxable supplies that you make. Section 9-5 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. You are registered for GST and are making a supply of the Property (which is located in Australia) for consideration in the course or furtherance of your enterprise. Therefore, your supply of the Property is a taxable supply. However, your supply of the Property will not be a taxable supply to the extent it is GST-free or input taxed. Based on the facts provided, there is no provision under the GST legislation that will make your supply of the Property GST-free to any extent. The issue we have to consider is whether or not your supply of the Property is input taxed to any extent. Section 40-65 provides that a sale of real property is input taxed but only to the extent that it is residential premises to be used predominantly for residential accommodation and the property is not commercial residential or new residential premises. The Property is not commercial residential or new residential premises. However, it has two buildings on the land, the main building and the former church hall. Therefore, we need to consider whether or not any part of the Property is residential premises, with the balance being a taxable supply of real property that is not residential premises. The term 'residential premises' is defined in section 195-1 to mean land or building that: a) is occupied as a residence or for residential accommodation, or b) is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation (regardless of the term of the occupation or intended occupation). Goods and Services Tax Ruling GSTR 2012/5 Goods and services tax: residential premises (GSTR 2012/5) provides the following commentary on residential premises at paragraphs 10 and 11: 10. The requirement for residential premises to be used predominantly for residential accommodation does not require an examination of the subjective intention of, or use by, any particular person. Premises that display physical characteristics evidencing their suitability and capability to provide residential accommodation are residential premises even if they are used for a purpose other than to provide residential accommodation (for example, where the premises are used as a business office). 11. Premises that do not display physical characteristics demonstrating that they are suitable for, and capable of, being occupied as a residence or for residential accommodation are not residential premises to be used predominantly for residential accommodation, even if the premises are actually occupied as a residence or for residential accommodation. For example, someone might occupy premises that lack the physical characteristics of premises suitable for, or capable of, residential accommodation (such as a squatter residing in a disused factory). Although the premises may satisfy paragraph (a) of the definition of residential premises in section 195-1, the premises are not residential premises to be used predominantly for residential accommodation. Smaller building Based on its physical characteristics, on the date of supply the smaller building on the Property, it is clear that the premises is residential premises to be used predominantly for residential accommodation. This smaller building meets the definition of residential premises as set out above. As such, the supply of this portion of the Property will be an input taxed supply of residential premises. Main building The main building on the Property does not meet the definition of residential premises as set out above. As defined, land or a building is residential premises if it is occupied as a residence or for residential accommodation. The main building was not occupied as a residence or for residential accommodation. As such, it is not residential premises under paragraph (a) of the definition of residential premises. In addition, land or a building is residential premises if it is intended to be occupied and is capable of being occupied as a residence or for residential accommodation. Paragraph 7 of GSTR 2012/5 states that this part of the definition refers to premises that are designed, built or modified so as to be suitable to be occupied, and capable of being occupied, as a residence or for residential accommodation. This is demonstrated through the physical characteristics of the premises. Further, paragraph 9 of GSTR 2012/5 provides that the requirement in section 40-65 of the GST Act that premises be 'residential premises to be used predominantly for residential accommodation' is to be interpreted as a single test that looks to the physical characteristics of the property to determine the premises' suitability and capability for residential accommodation. To satisfy the definition of residential premises, the premises must provide shelter and basic living facilities. Premises that do not have the physical characteristics to provide these are not residential premises to be used predominantly for residential accommodation (refer to paragraph 15 of GSTR 2012/5). Furthermore, not all premises that possess basic living facilities are residential premises to be used predominantly for residential accommodation. If it is clear from the physical characteristics of the premises that their suitability for living accommodation is ancillary to the premises' prevailing function, the premises are not residential premises to be used predominantly for residential accommodation (refer to paragraph 25 of GSTR 2012/5). Examples 4 and 7 from GSTR 2012/5 are relevant to your situation, and provide as follows: | Detailed Reasoning - Example 4 - office building: 26. Commercial Place is a five storey building. The ground floor has a foyer and reception area. All floors have been constructed with large open spaces for staff cubicles and desks, smaller office spaces, meeting rooms and areas for storage of documents. Each floor also contains a kitchen, amenities area and toilets. The ground floor also has showers provided with the toilet facilities. 27. While the office building provides shelter and basic living facilities including kitchens, toilets and shower facilities, the physical characteristics of the premises indicate that they are not residential premises to be used predominantly for residential accommodation. The physical characteristics indicate that the premises are a place for office workers to undertake tasks associated with a business. A supply of the premises would not be input taxed under Division 40. | Detailed Reasoning - Example 7 - shop: 36. Julian leases a building from its owner. It consists of a display area, a storage area, an office, a kitchenette and a toilet. The premises were designed as a shop which is evidenced by the architectural plans held by the lessor. Julian furnishes the premises in order to use it as his residence, but makes no structural changes to it. 37. The building provides shelter and basic living facilities. Although the physical characteristics of the building may be considered similar to characteristics found in a house or apartment, the physical characteristics of the building together with the design plans objectively show that the premises are not residential premises to be used predominantly for residential accommodation. Rather, the characteristics and design plans show that the building is a shop designed to facilitate a retail business. 38. Although Julian's occupation of the shop as a residence means the shop satisfies paragraph (a) of the definition of residential premises in section 195-1, the shop is not residential premises to be used predominantly for residential accommodation. The supply is not an input taxed supply under Division 40 and is a taxable supply under section 9-5. 39. The outcome of this example would differ if Julian had made modifications to the building that changed the physical character of the building from a shop to residential premises to be used predominately for residential accommodation. Paragraphs 84 to 86 at Appendix 1 - Explanation of GSTR 2012/5 clarify the above points further, as follows: Other premises 84. A variety of buildings may include basic living facilities, such as office buildings and hospitals. However, it does not follow that all premises that have these facilities are necessarily residential premises to be used predominantly for residential accommodation. 85. Although these premises have, in part, physical characteristics common to premises that provide living accommodation, they also have physical characteristics which reflect their suitability for another purpose. Where premises' suitability for the provision of living accommodation is ancillary to the premises' prevailing function, they are not residential premises to be used predominantly for residential accommodation. 86. Even if an office worker eats and sleeps overnight in an office building for a period, it does not follow that the premises are residential premises to be used predominantly for residential accommodation. Rather, the physical characteristics of the premises reveal that the building is an office. Similarly, a squatter might eat and sleep in an otherwise vacant factory or warehouse but this does not make it residential premises to be used predominantly for residential accommodation. On an objective assessment, we consider that the main building on the Property does not have the physical characteristics to indicate that it is intended to be occupied, you used the building as community facility to display and at the time of supply, it had the physical characteristics of a community facility. Based on the above, we consider that the building's suitability for the provision of living accommodation is ancillary to the building's prevailing function at the time of sale by you. As such, it is not residential premises under paragraph (b) of the definition of residential premises and cannot be input taxed supply because it does not satisfy the meaning of residential premises under the GST Act. Your supply of this portion of the Property will be taxable supply as all the requirements under section 9-5 are satisfied. Conclusion We determined that when you sold the Property, you are making a mixed supply of: a) to the extent of the main building, your supply is a taxable supply, and b) to the extent of the former church hall, your supply is input taxed. Apportionment Goods and Services Tax Ruling GSTR 2001/8 Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts (GSTR 2001/8) provides guidance on methods and examples on how to apportion consideration for a supply containing taxable and non-taxable components for a mixed supply. Paragraph 16 of GSTR 2001/8 describes a 'mixed supply' as a supply that contains separately identifiable taxable and non-taxable (input taxed) parts that need to be individually recognised. Your supply of the Property is a mixed supply comprising of separately identifiable parts being the former church hall (which is input taxed) and the main building (which is taxable). Paragraphs 26 and 27 of GSTR 2001/8 provide that any reasonable method can be used to apportion the consideration for a mixed supply. Furthermore, the method used must be supportable in the particular circumstances and you should keep records that explain the method used and you should keep records that explain the basis used to apportion the consideration between the taxable and non-taxable parts of a supply.