Private ruling: GST and sale of property
Published: October 2014

Ruling: Q1: Is the sale of properties a taxable supply? | A1: No. GST is payable on taxable supplies that you make. A supply is not a taxable supply to the extent the supply is GST-free or input taxed. Input taxed means that GST is not payable on the supply and there is no entitlement to an input tax credit for anything acquired to make the supply. Given the facts provided it is considered that your supplies of premises are input taxed supplies of residential premises under section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The premises are considered to be neither a taxable supply of 'commercial residential premises' as defined in section 195-1 of the GST Act nor 'new residential premises' as defined in section 40-75 of the GST Act.

Relevant facts and circumstances: You are registered for GST. You purchased adjoining properties on a specified date. Other than the purchase and sale of the properties you do not operate any other enterprise and do not earn any other income. The properties were purchased as residential premises without GST in the purchase price. The properties have available sewer, water and power and are capable of being occupied as residential premises. You sold these properties to a developer who is registered for GST. From the date of purchase until the date of sale the premises were not occupied and no leases were in place. All properties contain rooms suitable to be used as bedrooms, bathrooms, kitchens, etc with fittings appropriate to access utilities such as water and electricity (i.e. taps, power points). The properties have never been subject to a demolition order or similar due to the properties not being fit for human habitation. You had been approached by the local council querying your intentions for the properties. You advised the council was that you were going to lease the properties. However every time you attempted to put leases in place you received an offer from a third party to purchase the properties. As such, whilst the properties were in a fit condition to be leased to tenants, you actually never did lease them. You applied for a submission for a rezoning with the relevant local Council which, at the time the properties were sold, had not been approved. You did not apply to make any other alterations to the properties and have never applied for a development application. You have not made any improvements to the properties. You incurred the following expenditure whilst the properties were held: • Installed temporary fencing around the properties for safety and security purposes. • Incurred general maintenance expenses for the properties, such as lawn moving and rubbish removal. You sold the properties as input taxed supplies.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | Section 40-65 | Section 40-75 | Section 195-1