Private ruling: GST and sale of property
Published: June 2013

Ruling: Q1: Is your sale the property subject to goods and services tax (GST)? | A1: No, your sale of the property is not subject to GST.

Relevant facts and circumstances: You are registered for GST. You are carrying on an enterprise of providing professional services. Prior to 20YY, you purchased a rural property situated in Australia (the property). The property had a total area of several hectares and was classified as a farmland; however, it was not used for farming activities for the entire time you held the property. The property contained an old house which you used as a holiday house from the time of purchase. After 20YY, you demolished the old house and replaced it with a new one which you continued to use as a holiday house. You did not claim any input tax credits on the construction of the new house. You occupied the property as your main residence for several years. During a period of about X months, you leased the property for short term holiday stays. Accordingly, you reported rental income and expenses in your income tax returns. You ceased leasing the property or advertising it for lease from the time you occupied the property again as your holiday house. Several months after ceasing to lease the property and occupying it as your holiday house, you sold the property.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 and | A New Tax System (Goods and Services Tax) Act 1999 section 9-20.

Reasons for decision: Summary: GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) 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 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. In this case, you sold the property for consideration. The sale was connected with Australia as the property is located in Australia. Furthermore, you are registered for GST. The requirements in paragraphs 9-5(a), 9-5(c) and 9-5(d) of the GST Act are satisfied. Therefore, what remains to be determined is whether the sale of the property was made in the course of an enterprise that you carry on. 'Enterprise' is defined in subsection 9-20(1) of the GST Act to include an activity, or series of activities, done on a regular basis in the form of a lease, license or other grant of an interest in property. Leasing your property is an enterprise for GST purposes. However, you advised that you ceased leasing the property or advertising it for lease when you occupied the property as your holiday house. Your leasing enterprise has ceased; therefore the sale of the property was not made in the course of an enterprise that you carry on. The requirement in paragraph 9-5(b) of the GST Act is not satisfied; thus, your sale of the property is not a taxable supply. The sale of the property is not subject to GST.