Private ruling: Goods and Services Tax (GST) and the sale of residential premises
Date of advice: 7 June 2017
Published: October 2017

Ruling: Q1: Are you making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you sell your house? | A1: No.

Relevant facts and circumstances: You, X and your partner Y are individuals not registered for GST either individually or as a partnership. You purchased a property together which contained a residential house that was being rented to tenants. You moved into the house shortly after and lived there as your main residence. You then engaged a builder to subdivide this block of land, construct two additional dwellings at the rear of the property behind the house and to non-substantially renovate the house. Your original intention was to continue to live in the house whilst the other two residences were to be kept as rental properties for at least 5 years. Around the time you entered into the contract with the builder, Y became pregnant and you decided to move out of the house as you didn't feel a construction site was a healthy environment. The children that were born changed your plans as you now needed a bigger house to live in. Upon completion of the construction and renovation work all three dwellings have been rented until the present day.

Relevant legislative provisions: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision: Summary: Based on the information you provided, you do not satisfy all of the criteria in section 9-5 of the GST Act because one of these states that a supply has to be made in the course or furtherance of an enterprise that you carry on. You renovated the house to live in and only changed your mind to sell it due to the unforeseen circumstances of the birth of your children which made the house too small for your family for the ensuing years. Therefore your sale of the house does not reflect a significant commercial activity nor has the characteristics of a business deal and it will not be made in the course or furtherance of an enterprise that you carry on. It is a mere realisation of a private asset and not subject to GST.