Private ruling: GST - acquisition of residential premises
Date of advice: 17 October 2025
Published: 1 December 2025
Ruling period: From the date of issue until the quarter ending 31 December 20XX.
Date scheme commenced: 20 March 20XX.

Ruling: Q1: Are you making a creditable acquisition when you purchase the property? | A1: Yes. However the purchase is only partly creditable as the acquisition of the property is a creditable acquisition only to the extent that the supply is a taxable supply to you. | Q2: If your purchase of the property is not taxable, would any tax invoice issued with GST included in the price by the seller be considered a valid tax invoice? | A2: No. Where the acquisition is partly a creditable acquisition, a tax invoice should indicate the GST in the price for the taxable portion. | Q3: If a tax invoice with a GST inclusive price is issued by the seller, will the taxpayer be entitled to claim a GST credit on the acquisition of the property? | A3: Yes. Where the acquisition is partly creditable, you are entitled to claim GST on the price when you hold a tax invoice indicating the correct amount of GST.

Relevant facts and circumstances: • The seller entered into an Put and Call Option Agreement dated X date (the agreement) to enter a contract to sell real property in response to an offer by you. • The purchase price is under $20 Million plus GST if any is applicable. • The property description under the agreement is 'the property'. • A deed of variation altered the settlement date to Y date. • The size of the property is over 5 hectares. • You are registered for GST and will remain so registered. • You are buying the property with the intention to develop it. • An existing residence on the property will be demolished and the land will be subdivided and sold. • You have been advised by the seller that if the Commissioner finds your acquisition is not an input taxed supply, the seller will issue you a tax invoice GST inclusive. • You are willing to pay on receipt of a tax invoice including GST. • The seller provided the following information: o The seller acquired the land in some time after 20XX for much less than they are now selling for as a 'land investment'. Their purpose was to retain its private residential status for long-term holding and capital appreciation. o The seller did not acquire the property with GST in the price. o The seller has used it for residential rental business purposes for under $X per week. o The property is zoned residential. o No business-like activities have been undertaken on the property at any point during the ownership of the seller. o The site has been strictly residential; there have not been any farming activities. • You provided a copy of a residential lease (the lease) between the seller and a tenant. The lease shows it had a term of two years and expired on Z date. • The lease does not limit quiet enjoyment to a particular portion of the property. • You also provided a copy of a 'smart map' of the property. • You provided a copy of the title search indicating that the property is owned by the seller. There is a registered mortgage and a caveat in the name of you. • The seller is registered for GST.

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 11-5 | A New Tax System (Goods and Services Tax) Act 1999 , section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 , section 11-20 | A New Tax System (Goods and Services Tax) Act 1999 , section 11-25 | 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: You are making a creditable acquisition of the property to the extent that your acquisition is a taxable supply to you. You are making an input taxed acquisition of residential premises and taxable land as a mixed supply to you. | Detailed Reasoning - Detailed reasoning: You made a creditable acquisition to the extent that the property was a taxable supply to you. The relevant provisions are set out below. The supply to you must be wholly or partly a taxable supply to you. To be making a taxable supply to you, the supplier must meet the requirements of section 9-5. It states that: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with the indirect tax zone; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. Section 195-1 defines creditable acquisition has the meaning given by section 11-5. Section 11-5 states: 11-5 What is a creditable acquisition? You make a creditable acquisition if: (a) you acquire anything solely or partly for a *creditable purpose; and (b) the supply of the thing to you is a *taxable supply; and (c) you provide, or are liable to provide, *consideration for the supply; and (d) you are *registered, or *required to be registered. Section 195-1 also defines creditable purpose: (a) in relation to the acquisition of a thing-has the meaning given by sections 11-15 .... 11-15 Meaning of creditable purpose (1) You acquire a thing for a creditable purpose to the extent that you acquire it in *carrying on your *enterprise. (2) However, you do not acquire the thing for a creditable purpose to the extent that: (a) the acquisition relates to making supplies that would be *input taxed; or (b) the acquisition is of a private or domestic nature. ... Section 11-20 provides that you are entitled to the input tax credit for any *creditable acquisition that you make. Section 11-25 is about 'how much are the input tax credits for creditable acquisitions?'. It states that the amount of input tax credits for a creditable acquisition is an amount equal to the GST payable on the supply of the thing acquired. What are residential premises? Residential premises is defined in section 195-1 as land or a 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 occupation) and includes a floating home. Further, section 40-65 provides: (1) A sale of *real property is input taxed, but only to the extent that the property is *residential premises to be used predominantly for residential accommodation (regardless of the term of occupation). (2) However, the sale is not input taxed to the extent that the *residential premises are: (a) commercial residential premises; or (b) new residential premises other than those used for residential accommodation (regardless of the term of occupation) before 2 December 1998. ... Application to you: You must acquire the property as a creditable acquisition in order to claim input tax credits on the acquisition. Section 11-5 sets out the conditions for making a creditable acquisition and paragraphs 11-5 (a) to (d) set out the conditions to be satisfied. You meet paragraphs 11-5(c) and 11-5(d) as you are liable to provide the consideration and you are registered for GST. However, the acquisition must be solely or partly for a creditable purpose and it must be a taxable supply to you. Paragraph 11-5(a) says that the acquisition must be for a creditable purpose which is defined in section 11-15. Subsection 11-15(1) states that your acquisition is for a creditable purpose to the extent that it is an acquired for use in your enterprise. You are a property developer and you intend to build and sell new residential premises. The acquisition on this basis would be 100 percent for a creditable purpose. As an example of the alternative, if your intention under paragraph 11-15(2)(a) was to acquire the property in order to build the new residential premises in order to rent them, you would be acquiring the property to make input taxed supplies and this would not be for a creditable purpose. Continuing the creditable acquisition analysis, you must also satisfy paragraph 11-5(b) which states the supply must be a taxable supply to you. This means the supplier must satisfy the conditions of section 9-5. On the known facts, you will be providing consideration so paragraph 9-5(a) will be met. We also know that the property is located within the indirect tax zone (Australia) and that the supplier is registered for GST under ABN ### satisfying paragraphs 9-5(c) and 9-5(d) respectively. Two conditions remain: paragraph 9-5(b) whether the supply was made in the course of the seller's enterprise and whether the supply to you was input taxed or GST-free. The property being supplied contains an old residence and about X hectares of vacant land. The Commissioner's view on whether premises are considered residential premises is provided in Goods and Services Tax Ruling GSTR 2012/5 Goods and services tax: residential premises (GSTR 2012/5). The terms 'residence' and 'residential accommodation' are not defined in the GST Act and each term takes their ordinary meaning in context. The house being supplied to you is 'residential premises' as defined as it is fit for habitation and has the characteristics required based on the lease copy provided. From this we know that the property supplied is at least partially input taxed under Division 40. Therefore, the next issue to be determined is whether the entire block that comprises the property under a single title, is properly categorised as 'land supplied with the dwelling' (pursuant to paragraph 46 of GSTR 2012/5), or whether you have received a mixed supply of input taxed residential premises and taxable vacant land. We turn first to the question of whether the entire block has been 'supplied with the dwelling'. Where a residential building is located on an ordinary 'town', suburban or inner-city block, the land supplied with those residential premises will generally be easier to identify. The difficulty tends to arise more often with classifying the larger-sized blocks that are more common to rural, regional or industrial areas. According to paragraph 46 of GSTR 2012/5, the test is not what the land has been used for, but whether the physical characteristics of the land and the residential building as a whole indicate that they are to be enjoyed in conjunction with one another. Regarding the extent to which the land supplied with a building forms part of residential premises, GSTR 2012/5 provides the following at paragraphs 46 and 47: | Detailed Reasoning - Land supplied with a building: 46. There is no specific restriction, in the definition of residential premises, on the area of land that can be included with a building. The extent to which land forms part of residential premises to be used predominantly for residential accommodation is a question of fact and degree in each case. A relevant factor in determining this is the extent to which the physical characteristics of the land and building as a whole indicate that the land is to be enjoyed in conjunction with the residential building. The use of the land is not a determining factor in deciding if the land forms part of the residential premises. Vacant land 47. Vacant land is not capable of being occupied as a residence or for residential accommodation as it does not provide shelter and basic living facilities. Vacant land is not residential premises. Whether a creditable acquisition is to be apportioned between creditable and non-creditable parts is established by the wording in section 11-5(a) as it raises the prospect an acquisition can be solely or partly creditable. Per paragraph 46 of GSTR 2012/5, the extent to which 'land forms part of residential premises to be used predominantly for residential accommodation' will be a question of fact and degree in each case. Mixed and composite supplies Whether a supply to you is mixed or composite is dealt with in 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). At paragraph 16 of GSTR 2001/8, a mixed supply is: used to describe a supply that has to be separated or unbundled as it contains separately identifiable taxable and non-taxable parts that need to be individually recognised. At paragraph 17 GSTR 2001/8 sets out that a composite supply is: used to describe a supply that contains a dominant part and includes something that is integral, ancillary or incidental to that part. You treat a composite supply as a supply of a single thing. The supply to you is either mixed or composite. If mixed, the parts are separately identifiable and treated accordingly. If composite, the GST treatment applies as a single thing based on the dominant portion. Based on the facts of this case and given that the residential part of the property is not considered to be ancillary, integral or incidental to the vacant portion, the supply to you, and therefore your acquisition of the property, will be characterised as a mixed supply. If the residence is fenced off from the vacant portion, it is clear that the characteristics of the vacant land are different from those of the input taxed residential portion. On these facts, reasonable apportionment is required under section 9-80 to distinguish between the value of the vacant and input taxed supply to you. The final issue remaining is whether the supply to you of the vacant portion was made in the course of the enterprise of the seller under paragraph 9-5(b) as this determines if it was partially a taxable supply to you. Enterprise is defined in section 9-20. 9-20 Enterprises (1) An enterprise is an activity, or series of activities, done: (a) in the form of a *business; or (b) in the form of an adventure or concern in the nature of trade; or (c) on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property; or ... Subsection 9-20(2) sets out the activities that may not be an enterprise. Amongst these are activities done as an employee, hobbies and private recreational pursuits. None of the exceptions to an enterprise would apply in this case. The purchase of a large block of land in an urban growth corridor may amount to a series of activities in the form of a business, however, if the seller's acquisition is seen as a one-off purchase, it is also potentially an adventure in the nature of trade. The property was under lease and the sale is occurring in the termination of that leasing enterprise given that the definition of enterprise in paragraph section 9-20(1)(c) includes leasing real property and section 195-1 defines 'carrying on' in the context of an enterprise to include 'doing anything in the course of the commencement or termination of the enterprise'. The sale is therefore made in the course of the vendor's leasing enterprise. The facts provided about the seller point to their supply being made in the course of an enterprise. The fact they acquired approximately X hectares of land with a house on it for $$$ points away from a conclusion that they purchased with the intention to lease it long-term given the rental income was less than $X per week. It is unlikely that an investor would acquire a property in that price range for a return they could receive on a much smaller outlay for a simple single suburban block. The counter argument could be that it was bought for capital appreciation; however, the facts show the seller held the property for a short time given they only purchased some time after 2020. Other factors suggest the sellers' activities are in the form of a business or an adventure in the nature of trade. The seller is using the property to rent the house on an input taxed basis but despite this, the seller is registered for GST. Additionally, the seller is a unit trust. This is an unusual entity type for small-scale residential property leasing. This, combined with the above factors supports the conclusion that the supply was made in the course of an enterprise as the land was acquired to sell. Accordingly, the sale to you was at least partially a taxable supply as it was made in the course of an enterprise. Even though the lease was granted over the entire property, the use of the property is not the relevant consideration, only the characteristics of the property are relevant to assess the nature of the supply . The entire supply to you under the sale agreement is a mixed supply of input taxed residential premises and a taxable supply of vacant land. You are making a creditable acquisition in relation to the acquisition of the vacant part of the property. | Detailed Reasoning - Question 2: If the purchase of the property is not taxable, would any tax invoice issued with GST included in the price by the seller be considered a valid tax invoice? | Summary: The seller is registered for GST and the property is partially taxable. Under those circumstances we consider the vendor could issue a tax invoice. To the extent that you made a creditable acquisition you would be entitled to claim an input tax credit provided you hold a tax invoice. | Detailed Reasoning - Detailed reasoning: Section 29-70 is about tax invoices. 29-70 Tax invoices (1) A tax invoice is a document that complies with the following requirements: (a) it is issued by the supplier of the supply or supplies to which the document relates, unless it is a *recipient created tax invoice (in which case it is issued by the *recipient); (b) it is in the *approved form; (c) it contains enough information to enable the following to be clearly ascertained: (i) the supplier's identity and the supplier's *ABN; (ii) if the total *price of the supply or supplies is at least $1,000 or such higher amount as the regulations specify, or if the document was issued by the recipient-the recipient's identity or the recipient's ABN; (iii) what is supplied, including the quantity (if applicable) and the price of what is supplied; (iv) the extent to which each supply to which the document relates is a *taxable supply; (v) the date the document is issued; (vi) the amount of GST (if any) payable in relation to each supply to which the document relates; (vii) if the document was issued by the recipient and GST is payable in relation to any supply-that the GST is payable by the supplier; (viii) such other matters as the regulations specify; (d) it can be clearly ascertained from the document that the document was intended to be a tax invoice or, if it was issued by the recipient, a recipient created tax invoice. ... (2) The supplier of a *taxable supply must, within 28 days after the *recipient of the supply requests it, give to the recipient a *tax invoice for the supply, unless it is a *recipient created tax invoice. Subparagraph 29-70(1)(c)(iv) confirms the tax invoice must indicate the extent to which the supply is a taxable supply. In your case you are entitled to request a tax invoice complying with the requirements under subsection 29-70(1), and under subsection 29-70(2) the supplier is required to issue a tax invoice within 28 days of your request. | Detailed Reasoning - Question 3: If a tax invoice with a GST inclusive price is issued by the seller, will you be entitled to claim a GST credit on the acquisition of the property? | Summary: As the vendor is registered for GST they should issue you a tax invoice. Once you hold the tax invoice as you are acquiring a mixed supply of input taxed and taxable real property, you are entitled to an input tax credit to the extent that you made a creditable acquisition of the property, which is in this case the vacant portion. | Detailed Reasoning - Detailed reasoning: As stated in answer to question two above, as the seller is registered for GST a valid tax invoice can be issued if it complies with the requirements of section 29-70. Additionally where a tax invoice is issued by the seller, and you are making a creditable acquisition, you are entitled under section 11-20 to an input tax credit for any creditable acquisition you make. Under section 11-25 the amount of input tax credits for a creditable acquisition is an amount equal to the GST payable on the supply of the thing acquired. In this case the amount is tied to the GST payable on the vacant portion of the land. Goods and Services Tax Ruling GSTR 2013/1 Goods and services tax: tax invoices amongst other things provides, some guidance on mixed supplies and tax invoices: The extent to which each supply is a taxable supply 36. A tax invoice must contain enough information to determine the extent to which a supply is a taxable supply. Some ways in which this requirement will be satisfied include but are not limited to: • showing the amount of GST payable for each taxable supply - for example, if the unit price is $20 excluding GST and the GST is shown as $2, it can be ascertained that the supply is a fully taxable supply; or • a statement of the extent to which the supply is a taxable supply; or • a reference mark that denotes each taxable supply with a corresponding statement of the extent to which the supply is a taxable supply. Mixed supplies 37. A document for a supply that has separately identifiable taxable and non-taxable parts (a mixed supply) will meet the above requirement if the extent to which the mixed supply is a taxable supply can be found in or determined from information within the document. It does not matter that this information is not specifically stated or in a particular format. 38. If a transaction consists of a combination of fully taxable supplies and mixed supplies, the extent to which the supplies are mixed (and the extent to which those mixed supplies are taxable) and the extent to which they are fully taxable can be determined from a document where, for example, it: • denotes the supplies that are fully taxable with a reference mark; • denotes the supplies that are mixed supplies with a reference mark and the extent to which those supplies are taxable can be found or determined from information within the document; • shows the price of each supply; and • shows the total amount of GST payable. [Footnotes omitted] Where the tax invoice meets these requirements it will be valid and you may claim your input tax credits in the manner discussed above.

GST and the acquisition of residential premises