Private ruling: GST - sale of property
Date of advice: 15 April 2026
Published: 29 June 2026
Ruling period: <Date> to <date>
Date scheme commenced: <Date>

Ruling: Q1: Will your supply of the property situated at <property address> comprising of Lot <numbers> on Deposited Plan <number> under a single contract of sale be a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No.

Relevant facts and circumstances: You, as Trustee for <trust name>, are a discretionary investment trust that conducts a residential property leasing enterprise. The directors and equal shareholders of your corporate trustee are <individual names> (the directors). You voluntarily registered for GST from <date> to <date>. You reported your GST obligations on <reporting basis>. You have not been a member of a GST group nor a participant in a joint venture. Acquisition of the Property On <date>, your corporate trustee acting in its capacity as trustee, acquired the property situated at <property address> comprising of Lot <number> and Lot <number> on Deposited Plan (DP) <number> (the Property) by way of a transfer from the directors of the corporate trustee. The transfer was made in their personal capacity as owners. The directors purchased the Property on <date> for $<amount> and funded its acquisition via a loan. The supply of the Property to the directors was an input taxed supply because the sale was of residential premises. The Property was purchased by the directors subject to an existing tenancy as a long-term investment. The Property was leased throughout their period of ownership. Neither director is registered for GST, in their individual capacity nor jointly as a partnership. The transfer of the Property constituted non-monetary consideration and effected a change in the manner in which the Property was held. The value of the transfer is recorded in your balance sheet as advances, recognised as loan liabilities that reflect the market value of the Property at the date of transfer. The market value of the Property was deemed to be $<amount> as determined by a valuation completed by <<entity name>> on <date> for the purpose of assessing stamp duty. When you acquired the Property, it comprised of two lots as listed above with a combined estimated land size of approximately <square metres> and was zoned <zone type>. Lot <number> on DP <number> comprised of approximately <square metres> in land size and contained within its parameters a large garage (Lot <number>). Lot <number> on DP <number> comprised of approximately <square metres> in land size and contained an existing <number>-bedroom, <number> bathroom residence with a carport that flowed into the garage located on Lot <number> (Lot <number>). Restumping of existing dwelling When you acquired the Property, the existing residential premises had recently been re-stumped (around <date>). The re-stumping of the existing residential premises costing $<amount> involved lifting and releveling the house, refitting <number> new stumps and replacing timber steps to the back door and was funded by the directors. Kitchen renovation of existing dwelling Prior to the transfer of the property, the directors had also entered into a contract for the renovation of the kitchen. Although the works had commenced, they had not been completed by the time the Property was transferred to you. The existing tenant vacated the Property on <date>, to facilitate the renovations. The kitchen renovation cost approximately $<amount> and was predominantly cosmetic in nature. It involved replacing the kitchen cupboards, pantry, benchtops, all kitchen appliances, flooring, and painting including refreshing the bathroom/laundry. The previous tenant moved back into the existing residential premises on <date> following the completion of the renovation. Construction of secondary modular dwelling In <month/year> you entered into a contract with the builder to install a <number>-module, <number>-bedroom, <number>-bathroom, kitchen, meals/dining, modular building on Lot <number> for $<amount> (inclusive of GST). The modular dwelling itself cost approximately $<amount>. The installation of the modular dwelling included the following: • Sure Foot Piles supplied and installed • Transport of Modules to site via a side loader • Joining the two modules internally and externally including welding of modules to footings • Touch up and fit off of the home • Exterior touch up of cladding • Internal fit-off or shower screens, fixtures and fittings • Installation of a 5kw reverse cycle air conditioner • Sewer and water connection, excavation hire, veranda plumbing (not veranda) and storm water plumbing materials and labour ($<amount> including GST) • Gas HWS Service • Dedicated energy efficient light fittings • Ventilated fridge space created to required standard • Clothes line installed on module with awning • Clothes line installed on site. But excluded the following: • Additional machinery if required for hire to dig footings such as a jack hammer • Water tanks and connections • Electrical works onsite • Steps into the container (temporary provided) • Decking • Veranda and carport. The builder submitted a development application on your behalf to the Council for the installation of a detached transportable secondary dwelling on Lot <number> on DP <number> on <date>. On <date> you obtained consent from the Council for the installation of a detached transportable secondary dwelling creating a dual occupancy on Lot <number> on DP <number>. You provided the site plan and floor plan of the modular building. A fence was erected to separate the secondary modular dwelling and surrounding land from the existing residential premises. The secondary modular dwelling has its own separate driveway, yard and carport and its street address is <property address>. The street address of the existing residential premises is <property address> despite also having its driveway entrance on <street name>. The secondary modular dwelling was completed on <date>. During your, and the directors', period of ownership the Lots have not undergone any form of formal reconfiguration, nor have their respective sizes, dimensions or boundaries been formally amended or adjusted. It was your intention to retain the Property as a long-term income producing investment asset. You have leased the existing dwelling situated on part of Lot <number> together with Lot <number> which consists of vacant land containing the garage since <date>. You have also leased the secondary modular dwelling situated on part of Lot <number> to a separate tenant since <date>. Both dwellings are currently leased through a property manager. Sale of the Property Your property manager received an expression of interest from a prospective buyer at an appealing price. As a result, you are considering selling the Property (comprising both titles in a single transaction). You estimate the sale value of the Property will be $<amount>. Business activity statement (BAS) reporting Your BAS reporting was considered. Your tax agent indicated in an email dated <date>, that she erroneously registered you for GST when her practice took you on as a new client at the end of the <year> financial year. This was done to claim the GST on the expenses she initially thought you may have been entitled to; however, she subsequently realised that you are not entitled to claim GST on expenses related to your residential rental income as it is input taxed. Consequently, GST has never been reported or claimed in relation to your residential leasing enterprise, and you should not have registered for GST from the outset. On <date> you cancelled your GST registration effective from <date>. Other The rental income generated from leasing the property is your only source of income. Other than the potential sale of the Property itself you don't anticipate generating income from any other sources that may be GST-free or taxable in the next 12 months. You do not own any other properties. Neither you nor your related entities have undertaken property development in the past nor have current future development plans.

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 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 section 23-15 | A New Tax System (Goods and Services Tax) Act 1999 section 40-35 | A New Tax System (Goods and Services Tax) Act 1999 section 188-10 | A New Tax System (Goods and Services Tax) Act 1999 section 188-15 | A New Tax System (Goods and Services Tax) Act 1999 section 188-20 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1 | A New Tax System (Goods and Services Tax) Regulations 2019 regulation 23-15.01

Reasons for decision: Summary: In this ruling, • unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) • all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act. • all reference materials, published by the Australian Taxation Office (ATO), that are referred to are available on the ATO website ato.gov.au Section 9-40 provides GST is payable on taxable supplies. Section 9-5 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. For the sale of the property to be a taxable supply, all the requirements in section 9-5 must be satisfied. Based on the information provided, your proposed sale of the Property under a single contract will be made for consideration as you intend to sell it for its estimated market value of $<amount>. The Property is connected with the indirect tax zone as it is located in Australia. Therefore, you will meet the requirements of paragraph s 9-5(a) and (c). It remains to be determined whether the supply of the Property will be made in the course or furtherance of an enterprise that you carry on and as you are not currently registered for GST whether you are required to be registered. | Detailed Reasoning - Enterprise: The term 'enterprise' is defined in section 9-20. Section 9-20 defines an enterprise as, amongst other things, an activity or series of activities done on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property. The phrase 'carrying on' an enterprise is defined in section 195-1 of the GST Act to include doing anything in the course of the commencement or termination of the enterprise. This definition ensures that activities done in the course of the commencement or termination of the enterprise are included in determining whether the activities of the entity amount to an enterprise. Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian business number (MT 2006/1) contains the Commissioner's view on what constitutes an enterprise for the purpose of eligibility for an Australian business number. Goods and Services Tax Determination GSTD 2006/6 Goods and services tax: does MT 2006/1 have equal application to the meaning of 'entity' and 'enterprise' for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (GSTD 2006/6) extends the application of MT 2006/1 to the GST Act. The principles in MT 2006/1 apply equally to the term enterprise and can be relied upon for GST purposes. Paragraphs 303 to 322 of MT 2006/1 discuss activities done on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property. Goods and Services Tax Determination GSTD 2000/9 Goods and services tax: if you let out residential premises do you need to get an ABN for PAYG purposes or register for GST? explains at paragraph 7 that the letting of a property is an activity in the nature of a lease, licence or other grant of an interest in property. If it is done on a regular and continuous basis, the activity will meet the definition of enterprise. The leasing of a property whether commercial or residential, will fall within the scope of an 'enterprise' for GST purposes. This is the case regardless of the fact that proceeds generated from the rental of residential premises are input taxed. Furthermore, the activities associated with the commencement or termination of a leasing enterprise will also fall within the scope of an enterprise for GST purposes. In your case, you leased the Property on a regular and continuous basis. You leased the existing dwelling situated on part of Lot <number> along with Lot <number> comprising of vacant land containing the garage since <date>. You have also leased the secondary modular dwelling situated on part of Lot <number> to a separate tenant since <date>. Therefore, we consider that you are carrying on a leasing enterprise. The proposed sale of the property will be made in the course or furtherance of that leasing enterprise, including its termination. Therefore, you will meet the requirement of paragraph 9-5(b). The next issue to consider is whether you are required to be registered for GST. | Detailed Reasoning - GST registration: Section 23-5 provides that you are required to be registered under the GST Act if: (a) you are carrying on an enterprise, and (b) your GST turnover meets the registration turnover threshold. For the purpose of section 23-15, the current GST registration turnover threshold (other than for non-profit bodies) is $75,000 pursuant to regulation23-15.01 of the A New Tax System (Goods and Services Tax) Regulations 2019 . It has been established that you are carrying on a leasing enterprise, therefore you meet the requirement of paragraph 23-5(a). | Detailed Reasoning - GST turnover: Subsection 188-10(1) provides that you have a GST turnover that meets the registration turnover threshold if: (a) your current GST turnover is at or above $75,000 and the Commissioner is not satisfied that your projected GST turnover is less than $75,000; or (b) your projected GST turnover is at or above $75,000. 'Current GST turnover' is defined in section 188-15 as the sum of the values of all of your supplies made in a particular month and the preceding 11 months. 'Projected GST turnover' is defined in section 188-20 as the sum of the values of all of your supplies made in a particular month and the following 11 months. Paragraphs 188-15(1)(a) and 188-20(1)(a) provide that input taxed supplies are disregarded when calculating your current and projected turnovers respectively. In this case your only source of income is derived from leasing the Property and apart from the proceeds from the potential sale of the Property itself you don't anticipate generating income from any other sources within the next 12 months. Leasing the Property is an input taxed supply pursuant to section 40-35 (being a supply of residential premises that are neither commercial residential premises (hotel, motel, etc) nor accommodation in commercial residential premises). As such the proceeds generated from leasing the Property will not be included in the calculation of your 'current GST turnover' or 'projected GST turnover'. We now consider whether the proceeds from the proposed sale of the Property will to be included in the calculation of your projected GST turnover for the purpose of determining if you are required be registered for GST under section 23-5. Section 188-25 provides that in calculating your projected GST turnover, you disregard any supply made, or likely to be made, by you by way of transfer of ownership of a capital asset of yours: In working out your projected GST turnover, disregard: (a) any supply made, or likely to be made, by you by way of transfer of ownership of a capital asset of yours; and (b) any supply made, or likely to be made, by you solely as a consequence of: (i) ceasing to carry on an * enterprise; or (ii) substantially and permanently reducing the size or scale of an enterprise. Goods and Services Tax Ruling GSTR 2001/7: Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover (GSTR 2001/7)discusses this issue. The meaning of 'capital assets' is discussed at paragraphs 31 to 36 of GSTR 2001/7: Meaning of 'capital assets' 31. The GST Act does not define the term 'capital assets'. Generally, the term 'capital assets' refers to those assets that make up 'the profit yielding subject' of an enterprise. They are often referred to as 'structural assets' and may be described as 'the business entity, structure or organisation set up or established for the earning of profits'. 32. 'Capital assets' can include tangible assets such as your factory, shop or office, your land on which they stand, fixtures and fittings, plant, furniture, machinery and motor vehicles that are retained by you to produce income. 'Capital assets' can also include intangible assets, such as your goodwill. 33. Capital assets are 'radically different from assets which are turned over and bought and sold in the course of trading operations'. An asset which is acquired and used for resale in the course of carrying on an enterprise (for example, trading stock) is not a 'capital asset' for the purposes of paragraph 188-25(a). 34. 'Capital assets' are to be distinguished from 'revenue assets'. A 'revenue asset' is 'an asset whose realisation is inherent in, or incidental to, the carrying on of a business'. 35. If the means by which you derive income is through the disposal of an asset, the asset will be of a revenue nature rather than a capital asset even if such a disposal is an occasional or one-off transaction. Isolated transactions are discussed further at paragraphs 46 and 47 of this Ruling. 36. Over the period that an asset is held by an entity, its character may change from capital to revenue or from revenue to capital. For the purposes of section 188-25 the character of an asset must be determined at the time of expected supply. Paragraphs 258 and 259 of MT 2006/1 contain guidance on the distinction between trading/revenue assets and investment/capital assets. Paragraphs 258 and 259 provide the following: • Assets can be categorised as trading/revenue assets or capital/investment assets. Assets purchased with the intention of holding them for a reasonable period of time, to be held as income producing assets or to be held for the pleasure or enjoyment of the person, are more likely not to be purchased for trading purposes. • Examples of capital/investment assets are rental properties, business plant and machinery, the family home, family cars and other private assets. The mere disposal of capital/investment assets does not amount to trade. Since its purchase, the Property has been used to generate ongoing rental income and is therefore the profit yielding subject of your residential premises leasing enterprise. Based on the facts of this case, we consider that the proposed sale of the Property, consisting of Lot <number> containing the modular dwelling and the existing dwelling and Lot <number> comprised of vacant land containing a large garage used for the enjoyment of the tenant of the existing dwelling, will constitute the transfer of a capital asset for the purposes of section 188-25. Accordingly, the sale will be disregarded when calculating your projected GST turnover. Given the above, your turnover will consist of income that is excluded from the calculation of your GST turnover. On the basis that your circumstances do not change, your GST turnover will not meet the registration turnover threshold under paragraph 23-5(b) and you will not be required to register for GST in relation to the sale of the Property. | Detailed Reasoning - Conclusion: As you are not registered or required to be registered for GST, you will not meet the requirement in paragraph 9-5(d). Consequently, your supply of the Property will not be a taxable supply as you will not meet all of the requirements of section 9-5.