GST and development leases

1 Will the Development Works (collectively Buildings Works and Associated Works) undertaken by Entity A pursuant to the Crown Lease Contract for Sale, Crown Lease and Concept Delivery Deed, (collectively the Transaction Documents) on Land X, be consideration pursuant to section 9-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the taxable supply of Land X by Entity B, to Entity A under section 9-5 of the GST Act?

1 Yes to the extent that the Development Works to be undertaken by Entity A pursuant to the Transaction Documents, automatically belong or are transferred to the Entity B, or a third party nominated by Entity B, they will be non-monetary consideration within the meaning of section 9-15 for Entity B's supply of Land X, as Entity B receives something of economic value. However, the Development Works that are retained by Entity A will not be non-monetary consideration within the meaning of section 9-15 for Entity B's supply of Land X as Entity A receives the economic benefit. Question 2 Will the Development Services specified in certain clauses of the Deed of Agreement to be undertaken by Entity C pursuant to the Holding Lease Contract for Sale, Holding Lease and Concept Delivery Deed, Deed of Agreement (collectively, the Transaction Documents) on Land Y, be consideration pursuant to section 9-15 of the GST Act for the taxable supply of Land Y by Entity B, to Entity C under section 9-5 of the GST Act? Answer 2

Yes to the extent that the Development Services specified in certain clauses to the Deed of Agreement to be undertaken by Entity C pursuant to the Transaction Documents are required to obtain a Certificate of Practical Completion, they will be consideration for the supply of Land Y by Entity B pursuant to section 9-15. Additionally, the <type of works> (excluding the Building Works and Associated Works which Entity A are already under an obligation to undertake) that must be completed by Entity C in order for the Consequent Leases to be granted to Entity C, will also be additional non-monetary consideration for the supply of Land Y by Entity B. Question 3 Will Entity B make a creditable acquisition, pursuant to section 11-5 of the GST Act, of the Development Works undertaken by Entity A pursuant to the Transaction Documents, on Land X? Answer 3 Yes Question 4 Will Entity B make a creditable acquisition, pursuant to section 11-5 of the GST Act, of the Development Services undertaken by Entity C pursuant to the Transaction Documents, on Land Y? Answer Yes Question 5

Is the proposed valuation methodology a fair and reasonable basis to value the non-monetary consideration provided by Entity A and Entity C as identified under the above questions? Answer 5 Yes the Commissioner considers that it is reasonable for the parties to value the non-monetary consideration provided by Entity A and Entity C, by determining the full costing of the Associated Works and Development Services on a 'cost plus margin' basis as determined by a Quantity Surveyor. However, whether the suggested methodology is reasonable will depend on the approach taken by the quantity surveyor, the reasonableness of the margin chosen, and the instructions given to the quantity surveyor. Question 6 To which tax period are the supplies of Development Works/Services made by Entity A and Entity C respectively (identified in response to Questions 1 and 2) attributable? Answer 6

In circumstances where no monetary consideration is provided to Entity A in an earlier period for its supply of the those Development Works and no invoice has issued in an earlier tax period, Entity A will attribute the GST liability for its taxable supply of those Development Works and Associated Works identified at question 1 above to be additional non-monetary consideration for the supply of Land A, to the tax period in which the leasehold interest in Land A is transferred from Entity B to Entity A - i.e. on the grant of the Crown Lease. In circumstances where no monetary consideration is provided to Entity C in an earlier period for its supply of the those Development Services and no invoice has issued in an earlier tax period, Entity C will attribute the GST liability for its taxable supply of Development Services identified at question 2 correlating to a particular Stage Plan to the tax period in which the long-term leasehold interest in Land Y attributable to the respective Stage Plan is transferred from Entity B to Entity C - i.e. on the grant of the relevant Consequent Lease. This ruling applies for the following period : <Date> to <Date> The scheme commenced on: <Date>

On <date>, Entity B entered into an arrangement with Entity A and Entity C for the purchase and development of the 'Site' located in the <State> as a staged development including both commercial and residential areas. This was done under a number of Commercial Contracts (collectively the Transaction Documents), copies of which were provided with the private ruling application which was jointly submitted by the 3 entities. The Site comprised of Land X and Land Y. Land X Land X was purchased by Entity A from Entity B under a crown lease for the purchase price. Entity A is required to complete the Development Works on Land X in accordance with the Transaction Documents and as part of the conditions of the Crown Lease. The Development Works included Associated Works and Building Works. Some of these Associated Works are for the benefit of Entity A while others are retained by Entity B. Entity A is also permitted to undertake Building Works on Land X, which Entity A retains the benefit of.

Completion of the Development Works was not a condition of acquiring Land X under the crown lease from Entity B. However, failure to complete the Development Works in accordance with the terms of the Transaction Documents is a breach of the crown lease and entitles Entity B to terminate the lease. Entity A would be compensated for any Development Works retained by Entity B. Land Y

Entity C and Entity B entered into an arrangement to development Land Y under a short-term holding lease. Entity C is required to complete the Development Services on Land Y in stages and in accordance with the Transaction Documents and the conditions of the Holding Lease or risk forfeiting their entitlement to the holding lease and the right to apply for long term consequent leases. Development Services include <clause number> Works, <clause number) Works, Offsite Works and a < type of works>. The <type of works> are to be undertaken on Land X and Land Y. Entity C is also permitted to undertake Building Works on Land Y. Upon the satisfactory completion of the Development Services in a stage on Land Y, Entity C will surrender the holding lease over Land Y in so far as it relates to that stage and will be issued consequent long-term crown leases over the newly subdivided land. The issue of the consequent long-term leases is conditional on the satisfactory completion of the Development Services in the prescribed manner and withing the agreed timeframe. All 3 entities are registered for GST and report their GST obligations on a non-cash basis.

Entity A and entity C are each dealing with Entity B at arm's length. The 3 entities have agreed to value the Development Works and Development Services by determining the full costing of the services on a cost-plus margin basis as quantified by a Quantity Surveyor.

A New Tax System (Goods and Services Tax) Act 1999 section 9-5 A New Tax System (Goods and Services Tax) Act 1999 section 9-10 A New Tax System (Goods and Services Tax) Act 1999 section 9-15 A New Tax System (Goods and Services Tax) Act 1999 section 9-20 A New Tax System (Goods and Services Tax) Act 1999 section 9-75 A New Tax System (Goods and Services Tax) Act 1999 section 29-5 A New Tax System (Goods and Services Tax) Act 1999 section 29-10 A New Tax System (Goods and Services Tax) Act 1999 section 11-5 A New Tax System (Goods and Services Tax) Act 1999 section 11-10 A New Tax System (Goods and Services Tax) Act 1999 section 11-15 A New Tax System (Goods and Services Tax) Act 1999 section 149-15

Question 1 Will the Development Works (collectively Buildings Works and Associated Works) undertaken by Entity A pursuant to the Crown Lease Contract for Sale, Crown Lease and Concept Delivery Deed, (collectively the Transaction Documents) on Land X, be consideration pursuant to section 9-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the taxable supply of Land X by Entity B, to Entity A under section 9-5 of the GST Act? Summary Yes, to the extent that the Development Works to be undertaken by Entity A pursuant to the Transaction Documents, automatically belong or are transferred to Entity B, or a third party nominated by entity B, they will be non-monetary consideration within the meaning of section 9-15 for Entity B's supply of Land X, as Entity B receives something of economic value. However, the Development Works that are retained by Entity A will not be non-monetary consideration within the meaning of section 9-15 for Entity B's supply of Land X, as Entity A receives the economic benefit. Detailed reasoning Subsection 9-15(1) provides that consideration includes:

a)               any payment, or any act or forbearance, in connection with a supply of anything; and b)               (b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything. There are two elements to the definition of consideration, which are: •                 the payment by one entity to another; and •                 a nexus that must be established between the payment and a supply. Goods and Services Tax Determination GSTD 2021/1 Goods and services tax: development works in the Australian Capital Territory (GSTD 2021/1), provides guidance on the GST treatment of arrangements between government agencies and private developers in the context of the development of land in the <State>. GSTD 2021/1 considers whether building works carried out by developers on land they have acquired under a long-term Crown lease (Crown lease) and associated site works, have the necessary nexus and are therefore non-monetary consideration for the supply of that Crown lease by a government agency. Paragraphs 5 to 12 of GSTD 2021/1 state:

5.               Under a building arrangement, the monetary amount a developer pays to a government agency on completion of the contract to acquire a Crown lease over land in the ACT is consideration for the supply of the Crown lease by the government agency for the purposes of section 9-5. 6.               However, the building works a developer completes under a building arrangement (in accordance with the terms of the PDA and the Crown lease) are not consideration for the supply of the Crown lease by the government agency under section 9-5. 7.               The building works are not non-monetary consideration for the supply of the Crown lease land because the building works provide no measurable economic value to the government agency.The building works are of value to the developer as they can either retain the land, subdivide the land and sell the individual lots or sell the Crown lease land in its entirety to another entity.

8.               While the developer is required to complete these building works within a certain time period after acquiring the Crown lease, this stipulated timeframe does not make these works non-monetary consideration for the supply of the Crown lease. 9.               As explained in paragraph 3 of this Determination, the developer may also be required to undertake associated site works which fall into three categories. 10.            If ownership of the completed associated site works is retained by the developer, they are not non-monetary consideration for the supply of the Crown lease land by the government agency. This is because the associated site works retained by the developer provide no measurable economic value to the government agency.

11.            While building works and associated site works retained by the developer may assist in fulfilling a government agency's objectives of developing areas of land, they do not provide the government agency with anything other than assurance that the land is developed in compliance with the relevant government approved plans and the development complies with relevant laws (for example, environmental or health and safety laws). 12.            Completed associated site works that automatically belong to a government agency or are transferred to a government agency, or a third party nominated by the government agency(whether on unleased land or the Crown lease land), are non-monetary consideration for the supply of the Crown lease land. This is the case provided Division 81 and Division 82 do not apply. Considering the facts of this case, the arrangement between the Entity B and Entity A has the features typical of the arrangements outlined in GSTD 2021/1. The Transaction Documents require Entity A to complete the approved development on Land X which in this case includes, amongst other things:

•                 the construction and ongoing operation/maintenance of a <type of building>, and/or another approved recreational facility (Building works) (clause <numbers > of the Specimen Lease). •                 provide and thereafter maintain, hydraulic mains, storm water drains and sewer lines, storage areas, carparking, illumination, landscaping, as well as provide facilities for electrical and telephone cables (Associated works) (clauses <numbers>) of the specimen lease). within <number> months from the date of the commencement of the lease. In order for the Building Works and Associated Works to be consideration for the supply of the Crown lease land, there must be sufficient nexus between the supply and the consideration. [1] For goods, services or a 'thing' to be non-monetary consideration for a supply, it must have economic value and independent identity provided as compensation for the making of the supply. It must be capable of being valued and be a thing the acquirer would usually or commercially pay money to acquire. [2]

Paragraph 39 of GSTD 2021/1 states, as the meaning of consideration is broad, not all promises and obligations made and agreed between the parties will be non-monetary consideration for a supply. Some things are simply part of the terms of the arrangement on which the respective parties have reached agreement. Promises or obligations that have no economic value or independent identity separate from the transaction will not be non-monetary consideration for a supply. [3] In the context of granting a lease over land, the essential character of what is supplied is the legal right to exclusive possession of the land for the term. However, this does not prevent the owner of the freehold interest in the land imposing conditions regarding permitted use that will apply for the term of the lease. [4] The incorporation of 'building and development provisions' into <State> Crown leases, together with statutory restrictions on transfer or assignment of the Crown lease until these building and development provisions are satisfied [5] , are standard obligations in Crown leases in the <State> (paragraph 41 GSTD 2021/1).

Paragraph 43 of GSTD 2021/1 explains that, in relation to the building works or approved development, while the developer does not have a freehold interest in the land, the nature of a Crown lease in the <State> (usually for 99 years, at nominal rent, automatically renewable and compensation payable for the value of improvements if not renewed) results in: a.               the developer, as lessee, being the only entity able to lease or dispose of an interest in the buildings it constructs on the Crown lease land b.               no increase in the value of the reversion held by the <State> as the rent remains nominal for the duration of the Crown lease and future renewals, and c.               the developer or future lessees being entitled to compensation for the building works if the lease is ever terminated. Building Works as specified in clause <number> to <number>) of the Specimen Lease. The construction of the Building Works by Entity A on Land X it acquired via a Crown Lease will be retained and maintained/controlled by Entity AI. With the approval of entity B, Entity A may transfer the control or title to the Building Works to another entity.

Undertaking the Building Works consisting of the <type of building> and/or other recreational facility on Land X does not provide Entity B with anything of measurable economic value. For this reason, the construction of the Building Works on the Crown Lease land is not the provision of non-monetary consideration for Entity B's supply of Land X. [6] Associated works as specified in clause clauses <number> to <number> of the specimen lease Entity A is also required to provide Associated Works. Where the Associated Works are retained by Entity A, they do not constitute non-monetary consideration because Entity A is not providing another party with anything of measurable economic value.

However, the Associated Works that automatically belong or are transferred to Entity B or a government agency, or a third party nominated by a government agency (whether on unleased or Crown lease land) are non-monetary consideration because Entity A will be providing Entity B or the nominated third party something of economic value. Clause <number> of the Specimen Crown Lease grants over that part of the land identified as 'Proposed Services Easement' a reservation in favour of the relevant service provider to allow them to provide, maintain and replace services provided by that service provider. Associated Woks undertaken by Entity A in relation to the 'Reservation for Services' provides something of economic value to Entity B or the nominated service provider and represents something that the government would usually or commercially pay money to acquire and has measurable economic value. Conclusion

The proposed Development Works (Building Works and Associated Works), that are retained by Entity A are not non-monetary consideration for Entity B's supply of Land X as Entity A receives the economic benefit of these works. Therefore, the Development Works that are retained by entity A will not be non-monetary consideration within the meaning of section 9-15 for Entity B supply of Land X. Only, the Associated Works that automatically belong or are transferred to the Entity B, or a third party nominated by Entity B, are the provision of non-monetary consideration for Entity B's supply of Land X, as Entity B receives something of economic value. Therefore, these Associated Works will be consideration within the meaning of section 9-15 for entity B's supply of Land X. Question 2

Will the Development Services specified in certain clauses of the Deed of Agreement to be undertaken by Entity C pursuant to the Holding Lease Contract for Sale, Holding Lease and Concept Delivery Deed, Deed of Agreement (collectively, the Transaction Documents) on Land Y, be consideration pursuant to section 9-15 of the GST Act for the taxable supply of Land Y by Entity B, to Entity C under section 9-5 of the GST Act? Summary Yes, to the extent that the Development Services (<clause number> Works and <clause number> Works including offsite works specified in <clause number>) to be undertaken by Entity C pursuant to the Transaction Documents, that are required to obtain a Certificate of Practical Completion, will be consideration for the supply of Land by Entity B pursuant to section 9-15. Additionally, the <type of works> (excluding the Building Works and Associated Works which Entity A is already under an obligation to undertake) that must be completed by Entity C in order for the Consequent Leases to be granted to Entity C, will also be additional non-monetary consideration for the supply of the Land Y by Entity B. Detailed reasoning

Subsection 9-15(1) provides that consideration includes: (a) any payment, or any act or forbearance, in connection with a supply of anything; and (b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything. There are two elements to the definition of consideration, which are: •                 the payment by one entity to another; and •                 a nexus that must be established between the payment and a supply. Paragraph 12 of Goods and Services Tax Ruling GSTR 2001/6 Goods and services tax: non-monetary consideration (GSTR 2001/6) explains that consideration is not limited to payments of money: 12. A 'payment' is not limited to a payment of money. It includes a payment in a non-monetary or in an 'in kind' form, such as: •                 providing goods; •                 granting a right or performing a service (an act); and •                 entering into an obligation, for example to refrain from selling a particular product (a forbearance). Paragraphs 50 and 51 of GSTR 2001/6 provide that there needs to be a connection between the supply and the payment for the supply to be made for consideration:

50. Section 9-15 further provides that a payment will be consideration for a supply if the payment is 'in connection with', 'in response to' or 'for the inducement' of a supply. Thus, there must be a sufficient nexus between a particular payment and a particular supply for the payment to be consideration for that supply. 51. It follows that there are two elements to the definition of consideration. The first is the payment by one entity to another. The second element is the nexus that must be established between the payment and a supply. Paragraphs 71 and 72 of GSTR 2001/6 provide that the test of determining a sufficient nexus between the supply and the consideration is an objective one based on the true character of the transaction. Goods and Services Tax Ruling GSTR 2015/2 Goods and services tax: development lease arrangements with government agencies (GSTR 2015/2) explains the GST treatment of particular transactions arising in the context of development lease arrangements entered into between government agencies and private developers and outlines their particular features. [7]

Sometimes in the <State> the Government releases land for sale to developers by granting a holding lease to the developer which is then followed by the grant of a 99 year long-term lease to the developer. The principles outlined in this Ruling may apply to these arrangements in the <State>. [8] Paragraphs 14 and 15 of GSTR 2015/2 discuss common features of development lease arrangements. Paragraph 22 describes the actions that are typical in a development lease arrangement including that: •                 The government agency grants a short-term lease to the developer to allow the developer to undertake development works on the land. •                 The developer undertakes development works, on its own account and at its own risk, on land owned by the government agency. •                 The government agency transferring the freehold interest in the land or granting a long-term lease of the land to the developer. •                 The developer making one or more monetary payments to the government agency. The facts of this case align with the scenario outlined in paragraphs 14-15 of GSTR 2015/2 for the following reasons:

•                 The Entity B, being the government agency, will grant Entity C a Holding Lease for the purpose of undertaking works on Land Y. •                 Entity C is obliged to perform works under the arrangement on their own account and not as agent or builder for entity B •                 Entity C bears all the costs associate with the development of Land Y as per clause <number> of the Deed of Agreement •                 Entity C is required to undertake <clause number> and <clause number> works in accordance with the terms of the Deed of Agreement and within the timeframes set out in the Holding Lease and Deed of Agreement or risk forfeiting the entitlement to the Holding Lease and right to apply for the Consequent Leases under the Deed of Agreement •                 Entity B will progressively grant Entity C long-term leases over Land Y, pursuant to the statutory objectives as set out in section <number> of the <Act>, as and when Entity C completes its relevant obligations under the Deed of Agreement (namely, the completion of <clause number>, <clause number> Works including offsite works).

Paragraphs 11, 12 and 35 of GST 2015/2 discuss supplies made for consideration under a development lease arrangement: 11. Where the terms of the development lease arrangement make the supply of the land subject to or conditional on the developer completing specified development works, supply of the land by the government agency is consideration for the developer's supply of development services. The supply of development services by the developer is, in turn, consideration for the supply of land by the government agency. 12. Where the developer completes additional works on land retained by the government agency, the developer makes a supply of development services to the government agency. The supply of the land by the government agency is consideration for this supply of development services by the developer if: •                 the terms of the development lease arrangement make the government agency's supply of land subject to or conditional upon the developer completing the additional works, and •                 Divisions 81 and 82 do not apply. Paragraph 35 explains further:

35. There is a sufficient nexus between the development services and the transfer of freehold or grant of a long-term lease if the development lease arrangement makes the supply of the land subject to or conditional on the developer completing specified development works. For example, the developer only becomes entitled to the freehold or long-term lease on completion of the development or a particular stage of the development. Pursuant to the above listed transaction documents, Entity C is required to prepare Land Y for residential development of no more than <number> dwellings. Upon the Developer's completion of the elements of the Works for a particular stage, Entity C may apply to the Authority for the issue of Consequent Leases. The Developer will complete the development works/services on Land Y for which it holds a Consequent Lease, in stages. Entity C will sell the completed residential units to individuals. Part <number> of the Deed of Agreement makes the granting of the long-term Consequent Leases conditional upon Entity C satisfactorily completing the Works for the relevant Stage in the development of Land Y. 'Works' is defined in the Deed of Agreement to mean:

"all the Works and activities which the Developer is or may be required to execute and engage in under the Deed and includes all design, variations, remedial work and temporary work as specified in Annexure <number> and Annexure <number>;" It is these Works that have the relevant nexus to the grant of the Consequent Leases by Entity B. The Development Services comprising of <clause number> and <clause number> Works (including offsite works specified in <clause number>) supplied by Entity C are therefore non-monetary consideration for the supply of the Consequent Leases of Land Y by Entity B. While Building Works as defined in <clause number> of Annexure <number> to the Deed of Agreement are permitted on Land Y, they are not explicitly included in the <clause number> definition of 'Works' and are therefore not subject to the issue of the Certificate of Completion and consequently do not form part of the Works that must be completed in order for the Consequent Leases to be granted to Entity C. <Type of works>

Whilst the works listed under <clause number> and <clause number> do not specifically list the <type of works> that Entity C is required to undertake under the Transaction Documents, <clauses number> (Annexure <number>), <clause number> (Annexure <number>) to the Deed of Agreement and <clauses number and number> of the Transaction Document requires the <type of works> to be completed prior to the application for and the issue of any Consequent Leases. Under these clauses: •                 Entity C must obtain a letter of endorsement from the Entity B confirming the Developer has complied with all applicable terms of the Transaction Documents, this requirement being a prerequisite to the issue of a Certificate of Practical Completion under the Deed •                 Consequent Leases will not be granted until the Entity C has completed building and associated works related to the <name of precinct> and associated parkland

•                 Consequent Leases will be withheld until the Developer has completed any/all works related to any remaining <name of precinct> elements in the Estate. Compliance with this and the previous dot point will be demonstrated via the relevant letter of endorsement to be provided by the Entity B •                 Entity C must not apply to the Authority for any Consequent Lease unless and until the Entity C has completed the development of the <type of works> including all landscaping within the <specified spaces> •                 The Authority is permitted to decline to issue any Consequent Leases, unless and until the development of the <specified spaces> have been completed to the satisfaction of the Authority Consequently, the <type of works> also have a relevant nexus to the grant of the Consequent Leases by Entity B.

For avoidance of doubt, we consider the Building Works and Associated Works which <Entity A> are already under an obligation to undertake in respect of the <name of precinct> pursuant to the Crown Lease Contract for sale, Crown Lease and Concept Delivery Deed do not form part of the <type of works> that constitute 'Development Services' to be provided by Entity C to the Entity B. That is, the Building Works and Associated Works which <Entity A> are already under an obligation to undertake pursuant to the Crown Lease Contract for sale, Crown Lease and Concept Delivery Deed are not additional non-monetary consideration for the supply of the Land Y by Entity B to Entity C. We consider that Division 81 and 82 do not apply to the Entity B's grant of the Consequent Leases to Entity C. Conclusion

There is sufficient nexus between the completion of <clause number>, <clause number> Works and the <type of works> (excluding the Building Works and Associated Works which Entity A are already under an obligation to undertake) and the supply of the Land Y. The terms of the arrangement make the supply of the Land subject to the completion of the <clause number>, <clause number> Works and the <type of works> (excluding the Building Works and Associated Works which Entity A are already under an obligation to undertake). Therefore, as per paragraph 11 of GSTR 2015/2, the supply of Development Services in the form of the <clause number>, <clause number> works and the <type of works> (excluding the Building Works and Associated Works which Entity A are already under an obligation to undertake) by Entity C is additional non-monetary consideration for the Entity B's supply of Land Y pursuant to section 9-15. Question 3 Will Entity B make a creditable acquisition, pursuant to section 11-5 of the GST Act, of the Development Works undertaken by Entity A pursuant to the Transaction Documents, on Land X? Summary

Entity B is making a creditable acquisition pursuant to section 11-5 of the Associated Works described in the Transaction Documents but only to the extent that any of these automatically belong or are to be transferred to the government agency or a third party nominated by the government agency (whether on unleased land or Crown lease land). Entity B is not making creditable acquisitions pursuant to section 11-15 of any other Development Works the (Buildings Works and Associated Works that will be retained by Entity A) as contemplated under the Transaction Documents and undertaken by Entity A. Detailed reasoning Section 11-5 provides that you make a creditable acquisition if: a) you acquire anything solely or partly for a creditable purpose b) the supply of the thing to you is a taxable supply c) you provide, or are liable to provide, consideration for the supply; and d) you are registered or required to be registered. Did Entity B acquire the Development Works for a creditable purpose? The Entity B's acquisition of Development Works from Entity A needs to be acquired for a creditable purpose in order for paragraph 11-5(a) to be satisfied.

It first needs to be determined if Entity B has actually 'acquired' the Development Works, for the purposes of section 11-5. Subsection 11-10(1) defines 'acquisition' as any form of acquisition whatsoever. The ATO's view on what constitutes an 'acquisition' is further explained in paragraphs 14-15 and 53-54 of Goods and Services Tax Ruling GSTR 2006/9 Goods and Services Tax: Supplies (GSTR 2006/9). These are extracted below: 14. Supply is important in relation to input tax credits because if a supply is not made an entity cannot acquire anything for a creditable purpose, as required by paragraph 11-5(a). Making an acquisition of something is the first element to be considered in determining whether you make a creditable acquisition under section 11-5. The meaning of acquisition is given in section 11-10. The second element is the requirement in paragraph 11-5(b) that the supply of the thing to you is a taxable supply.

15. You make an acquisition if you are the recipient of a supply. That is, the supply is made to you. In most transactions concerning GST the recipient of a supply is the entity that is also provided with that supply. In contrast, some supplies are made to the recipient, but provided to another entity. Arguably, such provisions are also supplies. However, these are not relevant because there is no contractual or reciprocal relationship between the supplier and the entity being provided with the supply. An entity must have made an acquisition of a thing to satisfy the requirements of section 11-10. It is not sufficient that an entity has merely been provided with the supply. Also, an entity does not make an acquisition merely by paying for a supply. ... 53. The meaning of 'acquisition' in section 11-10 is the corollary of the meaning of supply in section 9-10. Subsection 11-10(1) provides that, 'An acquisition is any form of acquisition whatsoever'. Subsection 11-10(2) refers to the thing acquired, such as goods, services or a right, and the means by which the thing is acquired, such as its receipt or acceptance.

54. To make an acquisition you have to be the 'recipient' of the supply of the thing you are acquiring. Although the term 'recipient' does not appear in Division 11, it is defined in section 195-1 to mean the entity to which the supply was made. This definition suggests that there is a supplier, a recipient and that something is passed from the supplier to the recipient. As discussed in the answer to question 1, the only non-monetary consideration provided by Entity A to Entity B are the Associated Works described in the Transaction Document that automatically belong or are transferred to the government agency or a third party nominated by the government agency (whether on unleased land or Crown Lease land). The Building Works and Associated Works that do not automatically belong to the government agency or are not transferred to a government agency or a third party nominated by a government agency (whether on unleased land or Crown lease land) are not acquired by Entity B. It now needs to be determined whether the acquisitions identified above have been made for a creditable purpose. The meaning of creditable purpose is explained under section 11-15.

Section 11-15 provides that you acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise and the acquisitions do not relate to input taxed supplies or acquisitions of a private of domestic nature. And 'enterprise' is defined in subsection 9-20(1) to be an activity or series of activities done, among other things, by the Commonwealth, a State or a Territory, or by a body corporate, or corporation sole, established for a public purpose by or under a law of the Commonwealth, a State or a Territory. [9] Entity B is a Territory authority established under section <number> of the <Act>. Section <number> of the <Act> provides that Entity B's objects include the delivery of suburban development. Accordingly, in advancing the objects described under section <number> of the <Act>, Entity B is carrying on an enterprise. When Entity B makes acquisitions of Associated Works that automatically belong or are transferred to the government agency or another third party nominated by a government agency, Entity B will acquire them in carrying on its enterprise.

These acquisitions do not relate to input taxed supplies nor are they of a private or domestic nature. These acquisitions are therefore for a creditable purpose within the meaning of paragraph 11-5(a). Supply of the thing to you is a taxable supply Pursuant to section 9-5, a taxable supply is made where the supply is made for consideration, the supply is in the course or furtherance of an enterprise that is carried on, the supply is connected with the indirect tax zone (Australia) and the supplier is 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. The circumstances in which a supply is GST-free or input taxed are found in Divisions 38 and 40 respectively. In this case, there are no provisions in the GST Act under which Entity A's supplies would be GST-free or input taxed supplies. Paragraph 16 of GSTR 2001/6 provides that by providing non-monetary consideration for a supply, you are in turn making a supply.

As set out in question 1, the completion of the Building Works/Approved development works and the Associated Works and Offsite Works (except for the Associated Works and Offsite Works that automatically belong to a government agency or are transferred to a government agency, or a third party nominated by a government agency (whether on unleased land or the Crown lease land) are not non-monetary consideration for the supply of Land X. Consequently, there is no supply by Entity A to Entity B in respect of the Building Works and the Associated Works and Offsite Works which do not automatically belong to a government agency or are transferred to the government agency, or a third party nominated by the government agency (whether on unleased land or the Crown lease land). [10] However, in respect of Associated Works which automatically belong to the government agency or are transferred to the government agency, or a third party nominated by a government agency (whether on unleased land or Crown lease land) and are consequently not retained by Entity A, represent something that Entity B would usually or commercially pay money to acquire and has a measurable economic value. [11]

In the case of the Associated Works which automatically belong to a government agency or are transferred to a government agency, or a third party nominated by a government agency, non-monetary consideration is provided for the supply of the Land. Entity A's supply of Associated Works not retained by Entity A, to Entity B, will be a taxable supply as all the requirements of a taxable supply under section 9-5 of the GST Act will be satisfied. Therefore, the acquisition of Associated Works not retained by Entity A will meet the requirements of paragraph 11-5(b). Registered or required to be registered Entity B is registered for GST. Paragraph 11-5(d) is therefore satisfied. Conclusion Entity B does not make a creditable acquisition of Building Works and, Associated Works completed pursuant to the Transaction Documents that are retained by Entity A as not all the requirements of section 11-5 are satisfied.

However, Entity B makes a creditable acquisition for GST purposes of the Associated Works completed pursuant to the Transaction Documents that automatically belong to a government agency or are transferred to government agency or a third party nominated by a government agency (whether on unleased or Crown leased land) as the requirements of section 11-5 are satisfied Question 4 Will Entity B make a creditable acquisition, pursuant to section 11-5 of the GST Act, of the Development Services undertaken by Entity C pursuant to the Transaction Documents, on Land X? Summary When Entity B makes acquisitions of Development Services from Entity C, it will acquire them in carrying on its enterprise. These acquisitions do not relate to input taxed supplies, nor are they of a private or domestic nature. These acquisitions are therefore for a creditable purpose within the meaning of paragraph 11-5(a). Detailed reasoning

As established above in Question 2, Entity C is making a taxable supply of Development Services (<clause number> and <clause number> works including <type of works> (but excluding the Building Works and Associated Works which Entity A is already under an obligation to undertake) for non-monetary consideration in relation to Land Y to Entity B, consequently paragraph 11-5(b) and (c) are satisfied. When Entity B makes acquisitions of Development Services from the Entity C, entity B will acquire them in carrying on its enterprise. These acquisitions do not relate to input taxed supplies, nor are they of a private or domestic nature. These acquisitions are therefore for a creditable purpose within the meaning of paragraph 11-5(a). Conclusion Entity B has acquired the Development Services for a creditable purpose, the Development Services are taxable supplies made to Entity B, Entity B has provided consideration for the supplies, and Entity B is registered for GST. As the requirements of section 11-5 are met, Entity B's acquisition of the Development Services undertaken by Entity C pursuant the Transaction Documents, on Land Y will be a creditable acquisition. Question 5

Is the proposed valuation methodology in paragraph 70 of Goods and Services Tax Ruling GSTR 2015/2: Development lease arrangements with government agencies (GSTR 2015/2) (that is, the full costing of the Development Works/Services) a fair and reasonable basis to value the non-monetary consideration provided by Entity A and Entity C as identified under the above questions? Summary Yes , the Commissioner considers that it is reasonable for the parties to value the non-monetary consideration provided by Entity A and Entity B, by determining the full costing of the Associated Works and Development Services on a 'cost plus margin' basis as determined by a Quantity Surveyor. However, whether the suggested methodology is reasonable will depend on the approach taken by the quantity surveyor, the reasonableness of the margin chosen, and the instructions given to the quantity surveyor. Detailed reasoning Section 9-75 of the GST Act provides that the value of a taxable supply is 10/11 th

of the price. Price, where consideration is expressed as a non-monetary amount, is the GST inclusive market value of that consideration. GST inclusive market value means the market value of the consideration or thing, without any discount for any amount of GST or luxury car tax payable on the supply. The value of the non-monetary consideration is determined in accordance with the principles set out in Goods and Services Tax Ruling GSTR 2001/6 Goods and services tax: non- monetary consideration. [12] Paragraph 138 to 144 of GSTR 2001/6 provides: 138. Where the consideration for a supply is non-monetary, the GST inclusive market value of that consideration is used to work out the price and value of the supply. In most circumstances where parties are dealing at arm's length, we are of the view that the goods, services or other things exchanged are of equal GST inclusive market value. 139. As the GST inclusive market value of consideration will be shown as the price on any tax invoice that the supplier issues, the onus for determining the GST inclusive market value of the consideration rests with the supplier. 140. In Spencer v . Commonwealth of Australia

(1907) 5 CLR 418, the High Court of Australia looked at valuation methods and recognised the concept of a 'willing buyer and willing seller'. Griffith CJ stated: '...the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?"' 141. Market value is regarded as the price that would be negotiated at a specified time between a knowledgeable and willing but not anxious buyer and a knowledgeable and willing but not anxious seller acting at arm's length in an appropriate market. It is an objective test and not the subjective view of any one party.

142. Depending on the context or circumstances of a transaction, it may be necessary to value the consideration by reference to either a general market or a particular market. For example, a wholesaler who (in making a supply to a retailer) receives consideration in a non-monetary form, should value that consideration by reference to the price for which he/she would normally buy that product or service in a general market. If the wholesaler normally bought the product or service from a manufacturer, the trade market is the market in which it should be valued. If the wholesaler normally bought that product or service from a retail outlet, the retail market is the relevant market. 143. Problems can arise when there is no market or the value to the seller is different to that for the buyer. It does not matter whether there is only one buyer or seller or even if one or both are 'hypothetical'. Courts have determined that market value can be determined in these circumstances.

144. You may determine the GST inclusive market value of non-monetary consideration for a taxable supply by applying a method that produces a reasonable GST inclusive market value of the consideration. There will be situations where the methods used by parties differ according to their particular circumstances. Examples of reasonable methods include: •                 the market value of an identical good, service or thing; •                 the market value of a similar good, service or thing; •                 the market value of the supply; or •                 a professional appraisal. Paragraph 154 and 155 of GSTR 2001/6 provides: Professional appraisal 154. A professional appraisal directed at determining the market value of the consideration for your supply will be a reasonable method where it: •                 is done by a person who is recognised in the particular field in which the appraisal is being given as having the requisite skills and knowledge for the task; and •                 uses valuation methodologies that are consistent with professional guidelines. Other reasonable methods

155. Where you are making a taxable supply and you are dealing with another party at arm's length, you can use a reasonable valuation method as determined between you and the other party. Also, where both the supply and the consideration are difficult to value (for example, a forbearance may have no identifiable market), you can calculate a reasonable market value for the non-monetary consideration (for example, a 'cost plus margin' method). In relation to valuing non-monetary consideration for the supply of Crown Lease Land paragraph 27 of GSTD 2021/1 provides: 27. These associated site works are non-monetary consideration for the supply of the Crown lease land. The value of the non-monetary consideration is determined in accordance with the principles set out in GSTR 2001/6. In relation to development lease arrangements, paragraphs 69 and 70 of GSTR 2015/2 provide:

69. Where the parties to a development lease arrangement are dealing with each other at arm's length, the Commissioner considers that the things exchanged between the parties are of equal GST inclusive market value. Therefore, in the context of a development lease arrangement between a government agency and a developer, the parties can use a reasonable valuation method as agreed between them to determine the GST-inclusive market value of any non-monetary consideration for supplies arising in the context of a development lease arrangement. 70. For example, the full costing of the development works, undertaken by the developer as part of a competitive tender process, which takes into account the full cost of construction (including builder margins), provides a reasonable basis for determining the GST-inclusive market value of the supply of development services by the developer. It also provides a reasonable basis for calculating the price of the government agency's related supply of land (or grant of a call option).

Under the Transaction Documents, Entity A agrees to pay both monetary consideration, being the purchase price of $<amount> (exclusive of GST), as well as undertake certain Associated Works which have been determined at question 1 to be non-monetary consideration for the Entity B's supply of Land X. Under the Transaction Documents, Entity C also agrees to pay both monetary consideration - being the purchase price of $<amount> (inclusive of GST), as well as undertake certain Development Services which have been determined at Question 3 to be non-monetary consideration for the supply of Entity B's supply of Land Y.

It is considered that Entity A and Entity C are each dealing with Entity B at arm's length and the goods, services or other things exchanged between them are of equal GST inclusive market value. Under these circumstances, the parties can use a reasonable valuation method as agreed between them to determine the GST inclusive market value of the non-monetary consideration of the Associated Works and Development Services. However, the valuation method selected by the parties to value the non-monetary consideration must nonetheless be fair and reasonable and produce a reasonable GST inclusive market value of the things exchanged. Special condition clause <number> of the Crown Lease Contract and Holding Lease Contract sets out the methodology to be used to determine the non-monetary consideration of the 'Buyer's Works. Specifically, clause <number> states: the value of those Buyer's Works will be determined in accordance with a consistent methodology confirmed in the Private Rulings to each of the Buyer and Seller, or, in the absence of such a consistent methodology, the amount notified in writing to the parties by the Quantity Surveyor at least 5 Business Days prior to Completion

The parties propose to value the non-monetary consideration of the Associated Works and Development Services that have been determined above to be non-monetary consideration by calculating the full costing of the Associated Works and Development Services on a cost-plus margin basis as quantified by a Quantity Surveyor. Provided this proposed method meets the valuation requirements outlined in GSTR 2001/6 and GSTR 2015/2 and produces a reasonable GST inclusive value, it will be accepted by the Commissioner. Whether the suggested methodology is reasonable will depend on the approach taken by the quantity surveyor, the reasonableness of the margin chosen, and the instructions given to the quantity surveyor. Question 6 To which tax period are the supplies of Development Works/Services made by Entity A and Entity C respectively (identified in response to Questions 1 and 2) attributable? Summary

In circumstances where no monetary consideration is provided to Entity A in an earlier period for its supply of the those Development Works and no invoice has issued in an earlier tax period, Entity A will attribute the GST liability for its taxable supply of those Development Works and Associated Works identified at question 1 above to be additional non-monetary consideration for the supply of Land X, to the tax period in which the leasehold interest in Land X is transferred from Entity B to Entity A - i.e. on the grant of the Crown Lease. In circumstances where no monetary consideration is provided to Entity C in an earlier period for its supply of the those Development Services and no invoice has issued in an earlier tax period, Entity C will attribute the GST liability for its taxable supply of Development Services identified at question 2 correlating to a particular Stage Plan to the tax period in which the long-term leasehold interest in Land Y attributable to the respective Stage Plan is transferred from Entity B to Entity C - i.e. on the grant of the relevant Consequent Lease. Detailed reasoning GST attribution Entity A and Entity C account for GST on a non-cash basis.

Under subsection 29-5 (1) of the GST Act, GST payable on a taxable supply is attributable to: a)               the tax period in which any of the consideration is received for the supply, or b)               if, before any of the consideration is received, an invoice is issued relating to the supply - the tax period in which the invoice is issued. Under subsection 29-10(1) of the GST Act, the input tax credit to which you are entitled for a creditable acquisition is attributable to: a)               the tax period in which you provide any of the consideration for the acquisition, or b)               if, before you provide any of the consideration for the acquisition - the tax period in which the invoice is issued. In determining when consideration is provided for non-monetary transactions, paragraph 160 of GSTR 2001/6 provides some guidance. Depending on the circumstances, the time when the market value of the non-monetary consideration is to be ascertained may be: a)               when parties enter into a binding agreement, b)               when economic risk is transferred or c)               when a recipient assumes effective control.

In paragraph 197 of GSTR 2001/6, the Commissioner states that where consideration is the entry into or release from an obligation, the consideration is both received and provided where the obligation is entered into or the release is effected. The question of what is the act that effects entry into, or release from an obligation, is one of fact. Paragraph 89 of GSTR 2015/2 provides the following in relation to a ttribution of GST liabilities for taxable supplies arising under a development lease arrangement : 89. In the context of a development lease arrangement, attribution of a GST liability or a corresponding input tax credit entitlement is required in the tax period in which: •                 a monetary payment is received, or •                 some or part of the non-monetary consideration is received, or •                 an invoice is issued, whichever is the earlier. ... In relation to the attribution of the developer's GST liability for its taxable supply of development services paragraph 93 of GSTR 2015/2 provides:

93. Non-monetary consideration, comprising the transfer of the freehold or long-term leasehold interest in land (or in other cases, the grant of a call option), for the supply of development services made by a developer is provided in full immediately on the transfer of the freehold or long-term leasehold interest (or immediately on the grant of the call option in applicable cases). 94. In circumstances where no monetary consideration has been provided in an earlier tax period and no invoice has been issued in an earlier tax period, the developer's GST liability for its taxable supply of development services is attributable to the tax period in which the freehold or long-term leasehold interest in the land is transferred (or the call option is granted). Land X In relation to Land X, Entity A is supplying certain Development Works (Associated Works which will automatically belong to or will be transferred to the government agency or a third party nominated by the government agency) to Entity B for non-monetary consideration comprising the grant of the Crown Lease for Land X.

In circumstances where no monetary consideration is provided to Entity A in an earlier period for its supply of the those Development Works and no invoice has issued in an earlier tax period, Entity A will attribute the GST liability for its taxable supply of those Development Works and Associated Works identified at question 1 above to be additional non-monetary consideration for the supply of the Land, to the tax period in which the leasehold interest in Land X is transferred from Entity B to Entity A- i.e. on the grant of the Crown Lease. Land Y

In relation to the Land Y, the Deed of Agreement provides that Entity C shall undertake the development in accordance with the order and time provisions of the Stages Plan with Programme (Annexure <number>) and in accordance with the commencement and completion dates specified in Annexure <number>. Whilst the Stages Plan has not yet been finalised, clause <number> specifies what the Stage Plan must set out. This includes amongst other things, the works to be completed in each stage, works relating to the <type of buildings> and associated parklands, Consequent Leases in a Stage, and that each stage must be completed progressively in the order set out in the Stages Plan.

In this case, Entity C will supply Development Services to Entity B in accordance with the Stages Plan for non-monetary consideration comprising of the transfer of the long-term lease hold interest (grant of Consequent Leases) in the portion of Land Y attributed to the Stage Plan. In circumstances where no monetary consideration is provided to Entity C in an earlier period for its supply of the those Development Services and no invoice has issued in an earlier tax period, Entity C will attribute the GST liability for its taxable supply of Development Services correlating to a particular Stage Plan to the tax period in which the long-term leasehold interest in Land Y attributable to the respective Stage Plan is transferred from Entity B to Entity C - i.e. on the grant of the relevant Consequent Lease. > [1] Paragraph 37 of GSTD 2021/1 [2] Paragraph 38 of GSTD 2021/1 [3] See paragraph 80 of GSTR 2001/6. [4] Paragraph 40 of GSTD 2021/1 [5] See section 298 of the Planning and Development Act 2007 (ACT). [6] Paragraph 44 of GSTD 2021/1 [7] GSTR 2015/2 at paragraph 1 [8] GSTR 2015/2 at paragraph 6 [9] Paragraph 9-20(1)(g) of the GST Act [10] GSTD 2021/1 paragraphs 21 to 24 [11]

GSTD 2021/1 paragraphs 25 to 27 [12] GSTD 2021/1 at paragraph 27;