Written by the ATO
Charities were exempt from wholesale sales tax and with the introduction of the GST what impact will this have on charities selling cars? Is there any impact on charities in selling or purchasing property?
Entities that are registered for GST and are currently exempt from sales tax on the purchase of motor vehicles will be able to claim full input tax credits from the 1 July 2000. The normal transition arrangements where input tax credits are phased in do not apply to entities that are currently sales tax exempt for motor vehicles.
The sale of real property when it is residential premises that is used predominantly for residential accommodation is input taxed under s40-65(1). However the sale of commercial residential premises or new residential premises is a taxable supply under s40-65(2).
Specific Questions and Answers
The sale of buildings regardless of their prior use is generally a taxable supply. However, there are some exceptions to this principle.
If the premises are, or are intended to be used for residential accommodation, the sale will be input taxed, unless the sale constitutes the sale of new residential premises.
An example of a new residential sale would be a church that has been turned into a residence and is sold for the first time as a residence. In this instance, the sale would be taxable.
However, if the church had acquired a property as a residential property, any subsequent sale (provided it was still used for residential purposes) would be input taxed.
Sales of gifted real property will
not be GST free. Such sales will be treated in the manner described