Private ruling: GST and sale of land
Published: November 2014

Ruling: Q1: Is the sale of the property a taxable supply? | A1: No.

Relevant facts and circumstances: You own a property in Australia. You purchased the property as an investment property many years ago. The property is vacant land. Part of the property was used in a specified business carried on by an associate of yours. Your associate did not pay any rent for the use of the property to you. The market value of the supply of the property by way of lease is less than $75,000 per annum. Your associate paid for the costs associated with the land such as rates and claimed tax deductions for these expenses. Our records show that your associate has been registered for GST for many years. You have not carried on any other enterprise in respect of the property. You have not claimed any tax deductions in relation to the property during your ownership of the property. You do not own any other properties. You have not previously bought, sold or developed any properties. You are not carrying on any other enterprise. You are not registered for GST.

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. | A New Tax System (Goods and Services Tax) Act 1999 Section 72-5. | A New Tax System (Goods and Services Tax) Act 1999 Section 188-10. | A New Tax System (Goods and Services Tax) Act 1999 Section 188-15. | A New Tax System (Goods and Services Tax) Act 1999 Section 188-20. | A New Tax System (Goods and Services Tax) Act 1999 Section 188-25.

Reasons for decision: Summary: Subsection 7-1(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies. Section 9-5 of the GST Act 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 Australia; 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. (* denotes a term defined in section 195-1 of the GST Act) For the sale of your property to be a taxable supply, all of the requirements listed in section 9-5 of the GST Act must be met. One of the requirements of a taxable supply is that the supplier is registered or required to be registered for GST. You are not registered for GST. Section 23-5 of the GST Act provides that you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold of $75,000. Section 188-10 of the GST Act provides that you have a GST turnover that meets the registration turnover threshold if: • your current GST turnover is $75,000 or more and the Commissioner is not satisfied that your projected GST turnover is below $75,000, or • your projected GST turnover is $75,000 or more. Under sections 188-15 and 188-20 of the GST certain supplies are disregarded when calculating the current and projected GST turnovers, including supplies that are not for consideration and are not taxable supplies under section 72-5 of the GST Act (supplies to associates for no consideration). You advised that part of the property was used by your associate for no consideration. Your associate has been registered for many years and used the property in its specified business. Based on the information provided, the supply of the property to your associate was not a taxable supply under section 72-5 of the GST Act as the supply does not meet the requirements of that section. Therefore, the supply of the property to your associate is disregarded when calculating your current and projected GST turnovers. Further, under section 188-25 of the GST Act a supply by way of transfer of ownership of a capital asset is disregarded when calculating an entity's projected GST turnover. You advised that you have not carried on any other enterprise in respect of the property. We consider that the property is a capital/investment asset of yours; therefore the proceeds from the sale of the property are disregarded when calculating your projected GST turnover. You also stated that are not carrying on any other enterprise. Based on the information provided, you are not required to be registered for GST pursuant to section 23-5 of the GST Act as your GST turnover does not meet the registration turnover threshold of $75,000. Consequently, paragraph 9-5(d) of the GST Act is not met. As the sale of the property does not meet all the requirements of section 9-5 of the GST Act the sale is not a taxable supply.