Private ruling: The sale of residential property
Published: January 2013
Ruling period: N/A
Date scheme commenced: N/A

Ruling: Q1: I s the supply of the tenanted residential property subject to GST? | A1: No, the supply of the tenanted residential property is not subject to GST.

Relevant facts and circumstances: You are a superannuation fund and are the owner of a residential property. You have an Australian business number (ABN) but you are not registered for the goods and services tax (GST). You have owned the property for several years and the property is leased to an individual who occupies it as residential premises for private and domestic use. The property is not used for any commercial activity. You intend to sell the property as residential premises. You have not claimed input tax credits relating to the activity of leasing this property as you have considered the lease as an input taxed supply.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 40-65.

Reasons for decision: Summary: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states that: 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. (The terms marked with an asterisk are defined at section 195-5 of the GST Act) In the above section of the GST Act, it states that a supply is not a taxable supply to the extent that it is input taxed. Subsection 40-65(1) of the GST Act states that: A sale of *real property is input taxed , but only to the extent that the property is *residential premises to be used predominantly for residential accommodation (regardless of the term of occupation). In this case you are selling real property that has been used for residential accommodation. Therefore the sale of the property is input taxed. As the supply is not a taxable supply, GST should not be included in the price.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.