Private ruling: Assumption of obligations of a supply
Date of advice: 25 June 2025
Published: 29 September 2025
Ruling period: 8 October 20XX to 8 October 20XX
Date scheme commenced: 19 December 20XX

Ruling: Q1: Did you make a supply to the Landowners (Sellers) in relation to your acquisition of the property by way of assuming obligations under a contract of sale for the Land? | A1: No, you did not make a supply to the Sellers by way of assuming obligations under a contract of sale for the Land. | Q2: Did your supply (as identified under question 1) constitute non - monetary consideration (in addition to the monetary consideration) to the Sellers for your acquisition of the Land for the purposes of subsection 75 - 10(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) by way of assuming obligations in respect of the Land. | A2: No | Q3: Whether the value of the non-monetary consideration for the purposes of section 75-10(2) can be determined based on the total costs incurred such as: • The payment of Infrastructure Costs under the Deed A to the city; plus • The costs incurred in performing the obligation to remediate Land designated as Public Open Space (POS); plus • The costs incurred in performing the obligations to construct a public road which is ceded to the Crown; plus • The market value of Road Land, ceded by Entity A to the Crown | A3: No.

Relevant facts and circumstances: The description of the scheme is based on information provided by you in the following documents, which are to be read in conjunction with the facts as set out below: • Deed- Deed • Deed- Deed A • Deed - Deed B • Lease - Agreement for Lease • Plan- Agreed Structure Plan • District Planning Scheme Entity A, is registered for GST. Entity A operate as a property developer. Entity A entered into a Contract of sale (Sale Contract) to acquire land (the Land). The Land is situated under an Agreed Structure Plan. The particulars of the Sale Contract provide that the Land was sold for $XXXX. The Property settled in the relevant financial year. The Contract of Sale provides that: • The sellers were individuals (Sellers) • The purchase price was $XXX (including GST if applicable). • The Sellers agree that the supply of the property is not a taxable supply. • The Sellers were not registered for GST and were not required to be registered for GST at settlement. • The Sellers received payment of the Option Fee. • The Sellers and the City were parties to Deed A. • The property was sold subject to the following Specified Encumbrances as follows: Encumbrances The Property is sold subject to the Specified Encumbrances. The parties acknowledge that: The Seller and the City are parties to Deed A; • pursuant to clause X of Deed A the Seller must not transfer the Property without the prior written consent of the City, which will not be withheld if the Buyer first executes a deed of covenant prepared by the City's solicitors whereby the Buyer covenants to observe and perform the obligations of the Seller under the City; and • the City has registered the Caveats on the Certificates of Title of the Property as security for the Seller's performance of its obligations under Deed A. The Buyer: • agrees to enter into the Deed A on terms acceptable to the Buyer, acting reasonably, in order to assume the obligations of the Seller under the Deed A; and • releases the Seller from any further obligations under Deed A with effect from the Settlement There was no "Assumed liabilities" Clause in the Sale of Contract outlying an obligation for Entity A to further sub divide the Land. The sale was subject to Lease in respect of a portion of the property registered. The District Planning Scheme held that owners of the Land are to pay infrastructure costs. One of the events that triggers the obligation is the subdivision of land. The Sellers did not provide any infrastructure contributions in respect of the Land as these were deferred until "subsequent subdivision or other appropriate development of the Land". Entity A, submitted a Plan of Sub-division of the land to Planning Commission. An amendment to the Agreed Structure Plan made changes (inter alia) to rezone part of the land to residential. Entity A approval of Plan of subdivision was granted to further subdivide the Land. Entity A further sought and obtained development application in relation to the development as follows: Earthworks approvals and Civil works approvals. As a result of Entity A approval to further subdivide the Land, Entity A incurred the following separate costs: • Entity A incurred infrastructure costs per subdivided lot. • Entity A incurred costs to carry out the required works on the POS Land and to construct a road and ready the land for ceding, • Entity A incurred costs to carry out required works to construct an Intersection, to the extent the costs are not being compensated; and • The ceding of the land at no cost and without any payment or compensation. Accordingly, the value of ceding the Land Entity A received an amount by way of recoupment/compensation for value of the POS land ceded. Deed A Relevant clauses of the Deed Afor the purposes of this ruling are summarised as follows: Clause xx requires infrastructure costs to be paid by owners of the land Clause xx Because the Subdivision Proposal was for a subdivision in the form, and for the reason, described above, the City was prepared to accept that the Subdivision Approval would be premature as a trigger for the payment of infrastructure costs in respect of the Land. Clause xx Infrastructure costs will need to be paid by the owner of Proposed Lot 1 and Proposed Lot 2 respectively at a later time, upon the occurrence of an appropriate event. Clause xx A portion of Proposed Lot 2 is designated as public open space (''the POS Land") under the Agreed Structure Plan. The POS Land (or land in some other location substituted for the POS Land by amendment to the Agreed Structure Plan) would ultimately need to be ceded to the Crown for vesting in the City free of cost and without payment of compensation, at the time of further subdivision, or potentially upon some other event if imposed as a condition of approval or consent by a relevant planning authority. The ceding to the Crown would need to be without encumbrance, hazard or other factor associated with the previous use of the land as 'landfill'. In particular the land will first need to be deemed acceptable for the purposes identified (POS or road), with particular regard for environmental and geotechnical suitability. Clause xx Part of the route of the proposed Road Land is depicted on the Agreed Structure Plan as being located within the Land. Clause xx The Road Land (or some other substituted route for the said Road Link in the event that the Agreed Structure Plan is so amended) would ultimately need to: (a) be ceded to the Crown free of cost and without payment of compensation for the purpose of road reserve. (b) be constructed by the Owner at the Owner's cost as a road; and (c) have all structures and buildings removed from the land to the satisfaction of the Manager of Technical Services at the cost of the Owner. Recitals Notwithstanding the matters at paragraph x, the City is prepared, in view of the matters at paragraph x, to support the obligation for infrastructure costs to be paid, being deferred until subsequent subdivision or other appropriate development of the Land. Entity A entered into Deed B with the City. Deed B Background: The transferee is entitled to be registered as the proprietor or an estate in fee simple in land being: (a) being the whole of the land comprised in Certificate of Title Volume XXX Folio XX; and (b) being the whole of the land comprised in Certificate of Title Volume XXX Folio XXX, (Land) Caveats (Caveats) encumber the land in favour of the City and are supported by the terms of a deed between Sellers and the City (Deed A) a copy of which is annexed here to as Annexure x and forms part of this Deed. The Transferors have requested that the city provide a withdrawal of the Caveats to allow for the transfer of the Land to the Transferee and the City has agreed subject to the Transferee entering into this deed to secure compliance by the Transferee with the obligation set out in Deed A subject to the agreed variations in this Deed. Relevant clauses of the Deed Bfor the purposes of this ruling are summarised as follows: Clause xx Clause xx of the Deed A is deleted and replaced with the following: Infrastructure costs will need to be paid by the owner of the Land at a time later, upon the occurrence of an appropriate event in terms of DPS 2 as amended from time to time. Clause xx Clause xx of Deed A is deleted and replaced with the following: A portion of the Land is designated as public open space (the POS Land) under the Agreed Structure Plan. The POS Land (or land in some other location substituted for the POS Land by amendment to the Agreed Structure Plan) would ultimately need to be ceded to the Crown for vesting in the City..., at the time of further subdivision of the Land, or potentially upon some other event if imposed as a condition of approval or consent by a relevant planning authority. The ceding to the Crown would need to be without encumbrance, hazard or other factor associated with the previous use of the land as landfill. In particular, the land will first need to be deemed acceptable for the purposes identified (POS or road) with particular regard for environmental and geotechnical suitability. Clause xx Clause xx of Deed A is deleted and replaced with the following: In accordance with the provisions of Part 9..., the Road Land (or some other substituted route for the said Road Land in the event that the Agreed Structure Plan is so amended) would ultimately need to: • be ceded to the Crown for the purpose of road reserve; • be constructed; and • have all structure and buildings removed from that land to the satisfaction of the director of Planning and Sustainability or his or her nominee at the cost of the Owner; - as part of the process of further subdivision of the Land, or potentially upon some other event if imposed as a condition of approval or consent by a relevant planning authority. The ceding to the Crown would need to be without Deed A, hazard or other factor associated with the previous use of the land as landfill. In particular, the land will first need to be deemed acceptable for the purposes identified (POS or road), with particular regard for environmental and geotechnical suitability.

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 9-10 | A New Tax System (Goods and Services Tax) Act 1999 Division 75 | A New Tax System (Goods and Services Tax) Act 1999 section 75-5 | A New Tax System (Goods and Services Tax) Act 1999 subsection 75-10(1) | A New Tax System (Goods and Services Tax) Act 1999 subsection 75-10(2)

Reasons for decision: Summary: No, you did not make a supply to the Sellers by way of assuming obligations under a contract of sale for the Land. | Detailed Reasoning - Detailed reasoning: A supply is defined in subsection 9-10(1) of the GST Act as any form of supply whatsoever. A supply is essentially something that passes from one entity to another. Subsection 9-10(2) of the GST Act provides a non-exhaustive list of things that are included as supplies. Subsection 9-10(2)(g) of the GST Act states a supply includes any of these: • an entry into, or release from, an obligation: ii) to do anything; iii) to refrain from an act; iiii) to tolerate an act or situation; The Commissioner's view on the meaning of 'supply' is set out in Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9). Of relevance to this case is proposition 5 - "an entity will make a supply if it provides something to another entity". Paragraph 222 of GSTR 2006/9 relevantly states: 222. Where the parties to a transaction have reduced their understanding of the transaction to writing, that documentation is the logical starting point in determining the supplies that have been made. An examination of any relevant documentation and the surrounding circumstances, which together form the total fact situation, is also important in determining whether the documentation captures the nature of a transaction for GST purposes. Accordingly, in determining whether a supply of assuming obligations was made to the vendors, it is pertinent that the Sale Contract, Deed A and Deed B be examined. Your Contentions: You submit that the supply by Entity A to the Sellers has a clear nexus with the supply of the Land by the Sellers to it, and is therefore made for consideration (being the Land), meeting the third limb of the requirements for a taxable supply in subsection 9-5(a), for the following reasons: a) The Sale Contract clearly referred to the Deed A previously entered into by the Sellers with City regarding the Sellers obligations in respect of the subdivision and development of the Land including construction of specific assets to be handed to City and/or the Crown, and the obligations being registered on the Land title, subject to a charge and a caveat. b) The Sale Contract recognises that the obligations of the Sellers under the Deed A will not be completed and cleared prior to settlement but are to be assumed by Entity A as part of, and a requirement in order for, the sale of the Land to occur. The obligations are assumed by Entity A under Deed B it entered into with the City as a requirement of the Sale Contract, and a pre-condition of the transfer of the Land to it. c) Entity's A obligations with regard to the Land were registered against the Land title, whereby Entity's A had to charge the Land in favour of City and a caveat was registered on the Land title in its name prior to acquiring the Land title. If Entity A does not complete its obligations in relation to the Land, the charge and caveat will remain on the Land and Entity A will not be able to transact in the Land, develop or sell the land to purchasers. d) In respect of the Sale Contract, there is clearly monetary and non-monetary consideration provided for the supply of the land by the Sellers to Entity A. Without the nonmonetary supply, being the assumption by Entity A of the Sellers obligations in respect of the Land, under Deed A, there would have been no supply of the land. In addition to the above, the only way the Sellers can clear their obligations attaching to the Land would be to transfer their interests and obligations in the Land to another party. In the context of the transaction, they did this by selling the Land to Entity A. It follows that the supply by Entity A of entering into the obligation to tolerate an act or situation, was made for the transfer. | Detailed Reasoning - Application to this case: The Commissioner confirms that the supply made by the Seller to you under the arrangement was for consideration of $XX. According to the facts, Entity A acquired the Land along with an encumbrance on the Land by virtue of Deed A and Deed B. The Sale Contract included an encumbrance, being the agreement entered into between the Sellers and City regarding the Sellers obligations to City in respect of subdivision and development of the Land. Entity A renegotiated with City and entered into an agreement, Deed B. This became the governing document which outlined the objectives of the arrangement and identified the respective rights and obligations between the parties, as well as other things to be done by both parties such that the development can proceed. Importantly, the obligations were that owners of the Land are to pay infrastructure costs. The obligation moves with the ownership of the land. Once the land was sold, those obligations fell to Entity A as the owner of the land. Goods and Services Tax Ruling, GSTR 2004/9, Goods and services tax: GST consequences of the assumption of vendor liabilities by the purchaser of an enterprise (GSTR 2004/9) provides guidance on the assumption of a liability by contractual agreement stating: 46. A vendor may, at the time immediately before settlement, be subject to a statutory liability associated with carrying on the enterprise. The statutory obligation may be a liability for the payment of money (such as long service leave entitlements to employees) or to do some other thing (such as environmental rehabilitation work). After settlement, the statute may operate to impose the liability on the purchaser because the liability rests with whoever is the employer or owner of land. As a result of the statute, after settlement, the vendor is no longer liable in relation to the matter covered by the statute because it is no longer an employee or owner of the land. 47. For example, in relation to a mining enterprise, a statute may impose environmental obligations on the operator of the enterprise to rehabilitate the land where mining activities have been carried out. A consequence of a sale of the mining enterprise is that the purchaser becomes the holder of the mining tenement and subject to the statutory liability. The vendor is no longer responsible under the statute. [...] 52. Similarly, the purchaser of a mining enterprise does not actively enter into any obligations with the vendor to rehabilitate land if those obligations attach to the current holder of the mining tenement. In your case, Deed A is similar to a statutory obligation and is not a supply by the purchaser to the Sellers/vendor. Deed B outlined again that development costs (infrastructure costs, POS land and Roads) were only to be incurred as part of the process of further subdivision and were all contingent on future sub-division of the Land. As the obligations to City (infrastructure costs, POS land and Roads) that were supplied with the Land were contingent on your further sub-division of the Land, there was no mandatory requirement or "promise" to incur these obligations/costs on acquisition of the land to the Sellers/vendor. Therefore, Entity A did not make a supply to the Sellers/vendors in assumption of these obligations. | Detailed Reasoning - Question 2: Did Entity A supply (as identified under question 1) constitute non - monetary consideration (in addition to the monetary consideration) to the Sellers/Vendors for Entity A acquisition of the Land for the purposes of subsection 75 - 10(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) by way of assuming obligations in respect of the Land. | Summary: No. | Detailed Reasoning - Detailed reasoning: Subsection 75-10(1) provides that if a taxable supply of real property is under the margin scheme, the amount of GST on the supply is 1/11 of the margin for the supply. Under subsection 75-10(2), the margin for the supply is the amount by which the consideration for the supply exceeds the consideration for the acquisition of the real property (subject to subsection 75-10(3) and section 75-11). Consideration includes any payment, act, forbearance, response to or inducement in connection with a supply of anything. Consideration also includes a payment in a non-monetary or 'in kind' form. As discussed in Question 1, we do not consider that Entity A made a supply to the Sellers/Vendors of assuming obligations in respect of the land. | Detailed Reasoning - Question 3: Whether the value of the non-monetary consideration for the purposes of section 75-10(2) can be determined based on the total costs incurred by Entity A as follows: • The payment of Infrastructure Costs under Deed A to the City plus • The costs incurred in performing the obligation to remediate hectares of the Land; plus • The costs incurred in performing the obligations to construct a public road which is ceded; plus • The market value of the Road Land, ceded by Entity A to the Crown | Summary: No. As discussed, the only consideration provided for the supply of the land to Entity A was the monetary consideration of $XX.

Does Division 165 apply to this private ruling?: Division 165 of the A New Tax System (Goods and Services Tax) Act 1999 is a general 'anti-avoidance' rule that can apply in certain circumstances if you or another entity obtains a GST benefit from a scheme that you entered into or carried out for the main purpose of obtaining a GST benefit, or allowing another to obtain one. | It may also apply in some cases where the GST benefit arises as a principal effect of a particular scheme. An entity can get a 'GST benefit' under the GST, Luxury Car Tax or Wine Equalisation Tax laws. | If Division 165 applies, the benefit can be cancelled. For example, we might increase the net amount for a particular tax period. | Unless your private ruling specifically discusses Division 165, we have not considered the application of the anti-avoidance provisions to your case. | If you want us to rule on whether Division 165 applies in your circumstances, contact your contact officer to find out what details we will need to make the private ruling. | Did Entity A make a supply to the Sellers in relation to Entity A acquisition of the property (the Land) by way of assuming obligations under a contract of sale for the Land?