Private ruling: GST and new residential premises
Date of advice: 21 July 2025
Published: 15 September 2025
Ruling period: 1 July 2023 to 30 June 2024
Date scheme commenced: 1 July 2023

Ruling: Q1: Is Person A making a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when it sells its interest in xx (the Property)? If yes, what is the GST liability payable by Person A pursuant to section 9-70 of the GST Act? | A1: No. It will not be considered a taxable supply pursuant to section 9-5 of the GST Act

Relevant facts and circumstances: In xx, Person A (you) and your partner purchased xxx (the Property) as joint tenants. However, due to some underground works, settlement of the purchase of the Property only occurred later. The Property was a vacant land parcel at purchase. You and your partner subsequently entered into a building contact with xx to construct a residential home at the Property. You and your partner's intention was to use it as your primary place of residence. The loans for the purchase of land and the construction of the home were financed by you and your partner in your own individual capacity. However, you and your partner's relationship broke down prior to the completion of the construction of the home. Therefore, the Property has always remained vacant until its sale. The Property has never been rented out, therefore no rental income has been received jointly by you and your partner. Construction of the home at the Property was completed on xx and was sold for $xx. You have not carried on any previous property development activities either individually or jointly with another entity. You are a Maintenance Planner for Machinery by trade and are not registered for GST. No input tax credits have been claimed by you in relation to the purchase of the Property or on any acquisitions made in relation to the construction of the residential home, or any related works.

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 Service Tax) Act 1999 section 40-65 | A New Tax System (Goods and Services Tax) Act 1999 section 40-75

Reasons for decision: Summary: Section 9-40 provides that you are liable for the GST on any taxable supplies that you make. 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. From the information provided, your supply of the Property will satisfy the requirements in paragraphs 9-5(a) and (d), as the supply was made for consideration and is located in Australia. | Detailed Reasoning - GST-free and input taxed supplies: Supplies that are GST-free or input taxed are contained in Division 38 and Division 40 respectively. Your supply of your interest in the Property will not fall within provisions contained in Division 38 and, therefore, will not be GST-free. Section 40-65 provides that the sale of real property will be input taxed, but only to the extent the property is residential premises to be used predominantly for residential accommodation (regardless of the term of occupation). However, subsection 40-65(2) relevantly provides that a sale is not input taxed to the extent the residential premises are 'new residential premises'. Subsection 40-75(1) provides the definition of new residential premises. Of relevance to you, is the meaning set out in paragraph 40-75(1)(a) where it provides that residential premises are new residential premises if they have not previously been sold as residential premises (other than commercial residential premises) and have not previously been the subject of a long-term lease (which is generally a lease for a period of at least 50 years). Also, of relevance is that under subsection 40-75(2) residential premises are specifically excluded from being 'new residential premises' if the premises have only been used for making input taxed supplies of residential rental for the period of at least 5 years since the premises first became residential premises. In your case, you purchased the Property as a vacant land and it became new residential premises when construction was completed. Since then, the Property remained unoccupied and was listed for sale not long after completion. Therefore, considering the above, the Property is considered "new residential premises" and its sale will not be input taxed under section 40-65. It therefore needs to be determined whether the remaining requirements in paragraph 9-5(b) and 9-5(c) are satisfied, i.e. whether the sale of the Property was made in the course or furtherance of an enterprise and whether you are required to be registered for GST. From the facts provided, it is considered that your activities associated with the Property do not amount to an enterprise and that the sale of the Property is considered as a disposal of a private asset. It was due to your own personal circumstances which led to the sale of the Property which was meant to be used solely as your primary main residence. Therefore, as paragraph 9-5(b) is not satisfied, you are not making a taxable supply pursuant to section 9-5 when you sell your interest in the Property as not all the requirements under section 9-5 are met. Consequently, GST is not payable on the sale of your interest in the Property and there will be no GST liability on your sale.