Private ruling: GST and sale of property
Date of advice: 24 April 2026
Published: 13 July 2026

Ruling: Q1: Is the sale of property by the entity (you) a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore subject to GST? | A1: No

Relevant facts and circumstances: You are registered for GST. Pursuant to a writ in a Court Case, you sold the Property to satisfy the judgement debt. The Property The Property is zoned X. Permitted activities without development consent include extensive agriculture, home occupations, horticulture, markets, roads and roadside stalls. Permitted activities with consent include dwelling houses, eco-tourist facilities, agritourism, and commercial accommodation. The Property was advertised for sale through a local real estate agent. The Property includes: • X bedrooms • kitchenette • bathroom • timber floorboards • ceiling fans • verandah • carport The Property has access to nearby amenities, including tennis courts, walking trails and the river. The Property is part of a specified Community Area and is subject to the Community Framework. You provided a copy of the Community Framework, and several by-laws were considered. The Community Framework restricts the ability to permanently reside on the land and permits only short-term or temporary stays. Additionally, specific by-law provides that none of the lots within the Community Area are to be used as residential lots and that all lots must be operated as serviced lots. The Manager will lease back, each of the lots within the Community Area, and the lots will then be let out on a short-term holiday basis to holiday makers. The Manager is a caretaker of the Community Area who has entered into a lease agreement with all proprietors of all lots but does not include the managing agent. The Manager, as lessee of the lots, will have exclusive possession as lessee, and will be permitted to manage and regulate the use of all lots within the Community Area, by guests and invitees holidaying in those lots as it sees fit, in order to maintain and preserve the theme of the development being short term holiday accommodation. The Manager has the exclusive right to conduct such letting service and provide ancillary and other services to proprietors and occupiers of lots at their discretion. Pursuant to specific by-law, the Community has a Services Agreement with the Manager to undertake caretaking activities at their sole discretion. These activities include: cleaning, caretaking, security, supervision, general repair and maintenance of the Community Property, property management services, and supervision of employees and contractors of the Community. Furthermore, the Manager has the right to delegate their duties under the Services Agreement, to a responsible third party as determined by the Manager in their sole discretion. Conditions of appointment provide that: • The Manager or its agent or employee must either be the registered proprietor or lessee of a lot or must reside on or proximate to the Community Area, and • The Services Agreement, as well as any future services agreement or contract is subject to and conditional upon the proprietor of lot X agreeing to the Manager. The Community is responsible for the control, management, operation, maintenance and repair of the Community Property. The Community Property includes the tennis court, open space area and associated facilities and garbage storage area. By-law X requires the Community to levy contributions on the proprietors of all lots to meet the costs of the control, management, operation, maintenance, and repair of the Community Property. By-law X allows the Community to recover moneys owing as a debt. By-law X provides for reimbursement of the cost, charges and expenses and states that a proprietor or occupier of a lot must, on demand, pay or reimburse the Community for all costs, charges and expenses incurred in connection with the actual or contemplated enforcement or protection of any rights under the by-laws against any proprietor or occupier of a lot. These costs, charges and expenses include, without limitation, all costs incurred in engaging independent consultants or other persons to investigate or evaluate any matter of concern, and the Community's related administrative costs. By-law X prohibits the Community from carrying on a business or trading activity. Contract of sale The Property was sold for consideration at an auction. You provided a copy of the Contract of Sale and number of relevant clauses were considered. Under the Contract of sale, you are the vendor. You are not acting as an agent of either the creditor or the debtor. For completeness, in exercising your powers you are not acting as a representative of an incapacitated entity for the purposes of Division 58 of the GST Act.

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 9-20 | A New Tax System (Goods and Services Tax) Act 1999 section 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 40-65 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1 | A New Tax System (Goods and Services Tax) Act 1999 Division 38 | A New Tax System (Goods and Services Tax) Act 1999 Division 58 | A New Tax System (Goods and Services Tax) Act 1999 Division 105

Reasons for decision: Summary: Section 9-40 provides that GST is payable on taxable supplies. Section 9-5 provides that: | Detailed Reasoning - 9-5 Taxable supplies: 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. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. Division 38 and 40 provide for certain supplies to be GST-free and input taxed respectively. In this case the sale of the Property was for consideration, made in the course of an enterprise that you carry on and is connected with Australia. As the requirements of paragraphs 9-5(a) to (d) have been satisfied, and the supply is not GST-free under Division 38, we need to determine whether it is a supply of residential premises and thus an input taxed supply under Division 40. Residential premises Under subsection 40-65(1) of the GST Act, a sale of real property is input taxed only to the extent that the property is residential premises to be used predominantly for residential accommodation regardless of the term of occupation. Section 195-1 of the GST Act defines residential premises as land or a building that is occupied as a residence, or for residential accommodation, or is intended to be occupied, and is capable of being occupied as a residence or for residential accommodation (regardless of the term of occupation). The premises that are 'to be used predominately for residential accommodation' (regardless of the term of occupation) is explained in Goods and Services tax Ruling GSTR 2012/5 Goods and services tax: residential premises (GSTR 2012/5). Paragraph 9 of GSTR 2012/5 states, that the term is to be interpreted as a single test that looks on the physical characteristics of the property to determine the premises suitability and capability for residential accommodation. Paragraph 10 of GSTR 2012/5 explains that this test does not involve examining any particular person's subjective intention or actual use of the premises. Premises that display physical characteristics evidencing their suitability and capability to provide residential accommodation are residential premises. Paragraph 15 of GSTR 2012/5 states, that to satisfy the definition of residential premises, premises must provide shelter and basic living facilities. Premises that lack these physical characteristics are not residential premises to be used predominately for residential accommodation. In this case, although the Community Framework restricts occupation of the Property to short-term stays, the Property nonetheless satisfies the physical characteristics of residential premises. As outlined in paragraph 14 of GSTR 2012/5, residential premises are not limited to premises suited to extended or permanent occupation. Residential premises provide 'living accommodation' which does not require any degree of permanency; they may include lodging, sleeping or overnight accommodation. Accordingly, a restriction on the duration of occupation imposed by a by-law does not, of itself, preclude premises from being residential premises for GST purposes. The Property has all the necessary features to provide shelter and basic living facilities. Accordingly, it meets the definition of residential premises for the purposes of GST Act. However, subsection 40-65(1) will only be satisfied if the supply of the premises is not characterised as a supply of commercial residential premises. Commercial residential premises Section 195-1 of the GST Act defines commercial residential premises to include: (a) a hotel, motel, inn, hostel or boarding house, or [...] (f) anything similar. The definition of 'commercial residential premises' encompasses establishments similar to, or establishments that exhibit characteristics that place them on a similar footing to, hotels, motels, inns, hostels and boarding houses. The ATO's view on the meaning of commercial residential premises is set out in Goods and Services Tax Ruling GSTR 2012/6 Goods and services tax: commercial residential premises (GSTR 2012/6). Paragraph 10 of GSTR 2012/6 provides that objective factors that are relevant to characterising premises as falling within either paragraph (a) or (f) of the definition of commercial residential premises include the overall physical character of the premises and how the premises are operated. Paragraph 95 of GSTR 2012/6 provides that in addition to living accommodation areas, premises that are commercial residential premises include commercial infrastructure to support the commercial operation of the premises. This infrastructure may include (but is not limited to) reception areas, dining and bar areas, meeting/function areas, kitchens, laundry facilities, storage areas and car parks. This infrastructure is used to provide services to occupants. Premises described in paragraph (a) and similar premises under paragraph (f) of the definition contain some or all of these areas to some degree. Paragraph 98 of GST 2012/6 provides that a supply by sale or lease of real property consisting of part of a building cannot be characterised by reference to another supply. For example, a hotel may be strata titled so that each hotel room and the commercial infrastructure are separate strata units. Where the strata units are individually supplied under multiple sale contracts or leases, each individual supply of a strata unit must be characterised without reference to other supplies of strata units. A supply by sale or lease of strata titled rooms, apartments, cottages or villas without sufficient commercial infrastructure referred to at paragraph 95 of this Ruling is an input taxed supply of residential premises to be used predominantly for residential accommodation regardless of whether the building complex, or any part of it, is being, or will be, operated as commercial residential premises. This characterisation does not change where an entity makes multiple supplies of strata units by sale or lease to another entity that together constitute a hotel or other commercial residential premises. In this case, the Property consists of a single X bedroom, X bathroom cabin with a kitchenette and single carport situated on approximately X square meters of land located within the Community Area. The Property is one of several other lots within the Community Area, that are individually owned by their respective proprietors and are collectively operated by the Manager as short term accommodation. Through the Community, the proprietors enter into a Services Agreement with the Manager under which the Manager has exclusive possession of the individual lots, via the Lease Agreement, and is authorised to let out the lots (including the Property) to third parties as short-term accommodation. The Manager supplies the accommodation in their own right rather than as an agent for the proprietors. Although the Property, along with the other lots within the Community Area, are collectively operated by the Manager as short-term accommodation, paragraph 98 of GSTR 2012/6 makes it clear that the supply of the Property must be characterised on its own, and not by reference to the operation of the other lots, where it is supplied separately. In this case the sale of the Property is a supply that is distinct from the Manager's leasing enterprise. When considered on its own, the Property is not capable of providing accommodation to multiple, unrelated guests at the same time and lacks the commercial infrastructure (such as reception area, restaurant/bar, storage areas), outlined in paragraph 95 of GSTR 2012/6 necessary to support its operation in a manner similar to a hotel, motel, motel, inn, hostel or boarding house. A supply by way of sale of a single cabin without sufficient commercial infrastructure is a supply of residential premises to be used predominantly for residential accommodation regardless of whether it or any part of it is or will be operated as commercial residential premises. The arrangement between the proprietor of the Property and the Manager in this case does not change the essential character of the Property itself, and it does not transform the Property into a hotel, or boarding house, or something 'similar' to these premises. Accordingly, the Property is not commercial residential premises for the purposes of section 195-1 of the GST Act. The requirements of section 40-65 of the GST Act are therefore satisfied, and the sale of the Property is an input taxed supply of residential premises. As a result, the sale is not a taxable supply under section 9-5 of the GST Act, and is therefore not subject to GST.