An SMSF that sold subdivided residential lots was required to be registered for GST and thus liable to pay GST on the sale of those lots.
Mr and Mrs Collins resided and conducted their nursery business on 25 acres of land they acquired in 1986. In 1992 they acquired an adjoining 35-acre lot. In August 2014, they transferred both lots to a company they controlled (Flora Pacific), which held them as bare trustee for their super fund (the taxpayer). The taxpayer was registered for GST and paid GST on the rental receipts.
In early 2016, Flora Pacific obtained a Development Application from the local authority to subdivide both lots into 11 community title rural residential lots and one community association lot. The taxpayer caused construction works to be undertaken and between late June and mid-November 2017 sold 10 of the residential lots for $1m each. In the meantime, in October 2016, the taxpayer’s GST registration was cancelled at its request.
The AAT has held that the taxpayer was liable for GST on the sales of the residential lots because it was required to be registered for GST when the sales occurred. The AAT rejected the taxpayer’s contention that, in calculating whether its turnover met the GST registration turnover threshold, the sales were to be disregarded under s 188-25 because: