Issue
Is the entity, a property developer, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells a vacant industrial factory?
Decision
Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it sells a vacant industrial factory.
Facts
The entity is the seller of a vacant industrial factory. The entity is registered for goods and services tax (GST) and is selling the vacant industrial factory in the course or furtherance of its enterprise. The supply is made for consideration and is connected with Australia.
Reasons for Decision
GST is payable on taxable supplies. Under section 9-5 of the GST Act, an entity makes a taxable supply if: • it makes a supply for consideration; • it makes the supply in the course or furtherance of an enterprise that the entity is carrying on; • the supply is connected with Australia; and • the entity is registered or required to be registered.
However, the supply is not a taxable supply to the extent that the supply is GST-free or input taxed.
In this case, the entity is registered for GST and the supply satisfies the other positive elements of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it sells the vacant industrial factory. [NOTE: As the entity is making a taxable supply when it sells the vacant industrial factory it will be liable for one-eleventh of the GST-inclusive sales price. However, the entity may choose to apply the margin scheme under Division 75 of the GST Act, in which case it will only be liable for one-eleventh of the margin.]