Private ruling: GST and sale of residential property
Date of advice: 7 September 2021
Published: November 2021

Ruling: Q1: Was the sale of the residential property (Property) made by the vendor a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore subject to GST? | A1: No. The sale of the Property by the vendor was not a taxable supply under section 9-5 of the GST Act as the sale was an input taxed supply under subsection 40-65(1) of the GST Act. Thus, no GST is payable on the sale.


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


Relevant facts: You are a sole trader and registered for GST from 1 July 20XX. | You purchased a residential property (Property) in Month 20XX. | The Property is located next door to your family home and had an old house on it. | The reason you purchased the Property as an investment for your family for the future and for your retirement. The investment will increase your wealth and provide you with a better and easier life in the future. | X months after the purchase of the Property you started renovating the house during your spare time. You installed a new kitchen, painted the walls, polished the floors and put a roof on the veranda to improve the house from the state it was at the time of purchase. You also used the Property as your holding yard to park your cars and store other things. | You rented the house after the renovation was completed in Month 20XX. You had several tenants for the house but had issues with some tenants such as damaging the house, how they use the house and tenants not paying rent. | You lost interest in repairing the house on the Property and your family and friends advised you to build new houses on it. | You sought advice from your council about building new houses on the Property. You were told that you will need to provide an extra X square metres or more to the land if you want to build 2 separate houses with Torrens titles and have the plan approved. | You spoke with an architect who advised you to take the X square metres from the land of your family home and have two separate house title to each house for the Property. The size of the Property should be X square meter or more. | You have the land surveyed to make plans and have a subdivision work out. | After the subdivision plans were made, you were told to have the subdivision plans signed by the Council and the two banks as you have two separate bank loans. You would give X square metres of your private residence to the Property so the subdivision can be approved. Only one bank agreed to sign off the plan and after having difficulties to receive approval from the other bank you gave up registering the subdivision plans. | With the price of houses for sale rising considerably, you contacted your friend who is in the real estate and were advised that it is the opportunity for you to sell the Property. You explained your situation in regard to the subdivision plan and it was agreed that you will advise your solicitor to put in the sales contract that you will be responsible to pay for the registration of the subdivision plans. | The Property was placed on the market and a sale contract was entered into in Month 20XX. You gave us a copy of the sale contract. The Property was sold subject to the existing tenancy. No GST was paid on the sale. | The Property was sold as it was and no boundaries were adjusted. You advised that the property was sold subject to you paying for the subdivision plans and the cost to register the subdivision plans after the new owner has made the purchase.