Private ruling: GST and sale of real property
Published: March 2015

Ruling: Q1: Is the sale of the Property a taxable supply? | A1: No. For the sale to be a taxable supply all the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) must be satisfied. The sale satisfies the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(c) of the GST Act as follows: • the sale is made for consideration • the sale is made in the course of the leasing enterprise that you are carrying on and • the sale is connected with Australia because the Property is in Australia. However, the requirement of paragraph 9-5(d) of the GST Act is not satisfied because you are not registered. Furthermore, you are not required to be registered for GST because you do not meet the registration turnover threshold. The leasing of the Property and the sale are input taxed supplies and hence excluded when calculating your current and projected GST turnovers. Therefore, as not all the requirements of section 9-5 of the GST Act are met, the sale of the Property is not a taxable supply.

Relevant facts and circumstances: The deceased has owned the Property for a number of years. The Property is a large parcel of land and contains a house. The house has a reasonable backyard and the rear portion is fenced with gate access. The fence has remained there for a number of years and was installed because the rear is like bushland and could pose a hazard for children. Property is initially comprised all of the land in what is presently Lot A and B, and was subdivided in a certain year. Lot A contained the deceased commercial premises and was transferred to a superannuation structure for the deceased's retirement. Between a certain period the Property was the deceased's family home. After this period, the deceased relocated to the residence on the lot with the commercial premises. For a certain period, Property was rented out. A few years later, the deceased moved back to the Property and remained there until they passed away. Their surviving spouse remained on the Property for a number of years. Last year, you leased the Property. In a certain year, the deceased's associated entity ABC Pty Ltd purchased the vacant block of land at (ABC St). ABC St was used informally to access the Property. At the time of the purchase there was no intention to develop either the Property or ABC St. A number of years later, development approval was given for the construction of a number of staged townhouses. No works were ever commenced on the site and due to financial constraints the development could not be pursued. It was then decided that the land would be sold, ideally to a developer with the development approval in place. The Property continued to be marketed and for a certain period they were marketed 'on and off' attracting little interest. The development approval expired a few years ago. As no works were commenced, the approval was unable to be extended under the 'substantial commencement' provisions. The Property and ABC St were again marketed on the basis that development approval has been given but has since lapsed. You are in the process of selling Property. The contract of sale for the Property and ABC St are interdependent. The total sale price is $XXX. The buyer has expressed intention to develop the land. However, the buyer has agreed to take on the tenant and continue to lease after settlement. The deceased was registered for GST but the registration was cancelled from the date of their death. You are not registered for GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5. | Section 9-20. | Section 23-5. | Section 40-35. | Section 40-65. | Section 188-5. | Section 188-10. | Section 188-15. | Section 188-20. | Section 188-25.