Private ruling: goods and services tax (GST) and sale of property
Published: October 2013

Ruling: Q1: Will GST be payable on your sale of the property if you are not registered or required to be registered for GST at that time? | A1: No.

Relevant facts and circumstances: A number of years ago, you and your late spouse purchased a property located in Australia (the property) as joint tenants. The property is a number of hectares of rural land. Principal place of residence is also situated on the property. The property is all on one title. The intention at the time of purchase of the property was to use it in some form of primary production business. Some farming infrastructure was already on the land at the time of purchase. A number of years ago, you and your late spouse entered into a formal partnership agreement to commence a primary production business on the property. From that date, the partnership started, built up and continued to operate a commercial farming enterprise. The partnership added further farming infrastructure to the property over the period of operations. The partnership registered for GST from a certain date. On a certain date, your spouse passed away. Your spouse's interest in the property and partnership then passed to you. You registered for GST and continued to operate the primary production business as a sole trader. Your business operations are winding down with a view to selling the property.

Relevant legislative provisions: A New Tax System (Goods and Service Tax) Act 1999 subsection 7-1(1) | A New Tax System (Goods and Service Tax) Act 1999 section 9-5 | A New Tax System (Goods and Service Tax) Act 1999 section 9-40 | A New Tax System (Goods and Service Tax) Act 1999 section 23-5 | A New Tax System (Goods and Service Tax) Act 1999 section 138-5 | A New Tax System (Goods and Service Tax) Act 1999 section 188-10 | A New Tax System (Goods and Service Tax) Act 1999 section 188-15 | A New Tax System (Goods and Service Tax) Act 1999 section 188-20 | A New Tax System (Goods and Service Tax) Act 1999 section 188-25

Reasons for decision: Summary: GST is payable by you on your taxable supplies. You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which 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) If you are not registered or required to be registered for GST when you sell the property, you will not meet the requirement of paragraph 9-5(d) of the GST Act. Therefore, under such circumstances, you will not make a taxable supply because you will not meet all of the requirements of section 9-5 of the GST Act. Hence, if you are not registered or required to be registered for GST when you sell the property, GST will not be payable on your sale of the property. Additional information If an entity's projected GST turnover is under $75,000 a year, they are not required to be registered for GST. A sale of an entity's capital asset is excluded from the calculation of its projected GST turnover. Capital assets are assets retained to produce income or for private purposes. You retain the property partly to produce income and partly for private purposes (to the extent of the place of residence). Therefore, your sale of the property in question will be excluded from the calculation of your projected GST turnover because it will be a sale of a capital asset of yours. Your sale of your other capital assets will also be excluded from the calculation of your projected GST turnover.