Issue
Is the entity, a landowner, making a supply for which goods and services tax (GST) is payable under subsection 7(1) of the A New Tax System (Goods and Services Tax Transition) Act 1999 (Transition Act), when it receives payment under a court consent order for the compulsory acquisition of its land, gazetted before 1 July 2000?
Decision
No, the entity is not making a supply to which GST is payable under subsection 7(1) of the Transition Act, when it receives payment under a court consent order for the compulsory acquisition of its land, gazetted before 1 July 2000.
Facts
The entity is a land owner.
A parcel of land was compulsorily acquired from the entity. The Notice of Acquisition for the compulsory acquisition of the land was gazetted before 1 July 2000. The entity commenced a court action regarding the compensation for the compulsory acquisition.
A court consent order was made after 1 July 2000 that specified an amount payable for various claims including the compensation for the compulsory acquisition.
The entity is registered for GST.
Reasons for Decision
Under subsection 7(1) of the Transition Act, GST is only payable on a supply to the extent that it is made on or after 1 July 2000.
First, it must be determined whether the entity is making a supply. Section 9-10 of the A New Tax System (Goods and Services Tax) Act discusses the meaning of the word 'supply' for GST purposes. Paragraph 9-10(2)(d) of the GST Act states that a supply includes a grant, assignment or surrender of real property. In this case, a parcel of the entity's land is compulsorily acquired. Therefore, the supply is the surrendering of the land by the entity.
Next, the timing of the supply must be considered to determine whether the supply is subject to GST.
Subsection 6(3) of the Transition Act provides that a supply of real property is made when the property is made available to the recipient.
In a compulsory acquisition, the land is made available when the Notice of Acquisition is gazetted. In this case, the Notice of Acquisition was gazetted before 1 July 2000. Therefore, the land was supplied before 1 July 2000.
Therefore, the entity is not making a supply to which GST is payable under subsection 7(1) of the Transition Act, when it receives payment under a court consent order for the compulsory acquisition of its land, gazetted before 1 July 2000.