Private ruling: GST
Date of advice: 13 November 2017
Published: April 2018

Ruling: Q1: Are you required to be registered for GST when you sell your property? | A1: No. | Q2: Is GST payable on the sale of the property? | A2: No.

Relevant facts and circumstances: You own a property in Australia. You own the property in your own capacity. You have allowed another entity to operate a business on the property. You do not receive any rent or other consideration from the other entity for the occupation and use of your property. You are not registered for the goods and services tax (GST). You have been working as an employee and you do not carry on any other enterprise or business activities. You intend to sell the property to a third party. You have received an offer from a potential buyer to purchase the property. From settlement, the purchaser will lease the property to the other entity for a period. The sale is a one off transaction, in consequence of you retiring from the workforce.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 7-1, | A New Tax System (Goods and Services Tax) Act 1999 section 9-5, | A New Tax System (Goods and Services Tax) Act 1999 section 23-5, and | A New Tax System (Goods and Services Tax) Act 1999 section 188-25.

Reasons for decision: Summary: Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies. Under section 9-5 of the GST Act, you make a taxable supply if: ● you make the supply for consideration; ● the supply is made in the course of carrying on an enterprise; ● the supply is connected with the indirect tax zone; ● you are registered or required to be registered for GST; and ● the supply is neither GST-free nor input taxed. On the facts of this case, there are no provisions in the GST Act to make the sale of your property GST-free or input taxed. You are not currently registered for GST. Therefore, in deciding whether the sale of your property is a taxable supply, we need to determine whether at the time of sale, you will be required to be registered for GST. | Detailed Reasoning - Are you required to be registered?: Under section 23-5 of the GST Act, you are required to be registered if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold. The applicable registration turnover threshold is $75,000. You have a GST turnover that meets the registration turnover threshold if your current GST turnover is at or above $75,000 and your projected GST turnover is not below $75,000. Goods and Services Tax Ruling GSTR 2001/7 explains the meaning of GST turnover and the effect of section 188-25 of the GST Act on the calculation of projected GST turnover. GSTR 2001/7 is available on our website at www.ato.gov.au. In calculating your GST turnover under Division 188 of the GST Act certain supplies are excluded. Section188-25 of the GST Act requires you to disregard the following when calculating your projected annual turnover. (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. On the facts provided, we consider that the sale of the property is a transfer of ownership of a capital asset by you. Therefore, the sale of the property will be excluded from the calculation of your projected GST turnover. Accordingly, your GST turnover will not meet the registration turnover threshold and you will not be required to be registered for GST. As you are not registered and will not be required to be registered for GST at the time of sale, the sale will not meet all of the requirements for a taxable supply under section 9-5 of the GST Act. Consequently, GST will not be payable on the sale of the property.