Private ruling: GST and residential premises
Date of advice: 20 April 2021
Published: July 2021

Ruling: Q1: Is the supply of the property located in the indirect tax zone a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 ? | A1: No. The property will be an input taxed supply of residential premises.

Relevant facts and circumstances: You own a property in the indirect tax zone (the Property). You are not registered for GST. You inherited the Property. The Property was built in the early 19XX's. The Property is zoned residential. You leased the Property to a tenant, who used it to run a business from XXXX until XXXX. Photos provided show the Property contains 3 bedrooms, 1 bathroom, kitchen, living area, and an external laundry and courtyard. There is no parking on the Property, parking is available on the street. Although the Property is in disrepair it is still habitable and there are no orders from local authorities preventing it from occupied as residential premises. You will be selling the Property without conducting any renovations. You entered into a contract to sell the Property on XX/XX/XXXX, with a settlement date of XX/XX/XXXX. The Property has been vacant since XX/XXXX. You now live in an aged care facility and want to sell your investments so you can meet your costs. You also own X other residential properties, which are leased to residential tenants. The proceeds from the sale of the Property will be used to cover your costs in the aged care facility.

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

Reasons for decision: Summary: GST is payable on taxable supplies. Section 9-5 states: 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. In your case the important issue for consideration is whether the sale of the Property is input taxed. Subsection 40-65(1) states: 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). Section 195-1 defines residential premises to mean 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 for residential accommodation; (regardless of the term of the occupation or intended occupation) and includes a floating home. The Property is not new residential premises and has all the characteristics of premises capable of being occupied as a residence. Although much of the Property is in a state of disrepair, the general structure of the premises is sound and habitable, capable of providing basic shelter and living facilities. The supply of the Property will be an input taxed supply of residential premises. The supply will not be a taxable supply under section 9-5 of the GST Act.