Private ruling: Sale of taxable supplies
Date of advice: 13 January 2017
Published: June 2017

Ruling: Q1: Are you making a taxable supply when you sell your commercial property? | A1: No

Relevant facts and circumstances: The entity (you) is not registered for GST. You own a commercial property (the Property). You carry on an enterprise of leasing the Property. You do not carry on any other enterprise. Your GST turnover from all sources is less than $75,000. You have entered into a contract to sell the Property.

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 23-5 | A New Tax System (Goods and Services Tax) Act 1999 section 188-10 | A New Tax System (Goods and Services Tax) Act 1999 section 188-25

Reasons for decision: Summary: Note: In this reasoning, unless otherwise stated, ● all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) ● reference material(s) referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au Section 9-5 provides 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 for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. The issue in this case is whether you are required to be registered for GST as you are currently not registered. Section 23-5 provides that you are required to be registered for GST if your turnover meets the registration turnover threshold (currently $75,000). Section 188-10 provides that your turnover meets the registration turnover threshold if your current turnover is at or above $75,000 and the Commissioner is not satisfied that your projected GST turnover is below $75,000, or your projected GST turnover is at or above $75,000. Section 188-25 excludes certain supplies when calculating your projected turnover. Such supplies include the transfer of a capital asset or any supply made or likely to be made by you as a consequence of ceasing to carry on an enterprise. Paragraphs 31 to 36 of Goods and Services Tax Ruling GSTR 2001/7 Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover discuss the meaning of capital assets. In this instance, we consider the Property to be a capital asset and as such, the sale of the Property is excluded from the calculation of your projected turnover. As your current turnover is below $75,000, and your projected turnover is also below $75,000 (as the sale of the Property is disregarded), you are not required to be registered for GST pursuant to section 23-5. As you are neither registered nor required to be registered, you do not satisfy all the requirements for making a taxable supply. Therefore, the sale of the Property will not be a taxable supply.