In November 2012 over 50 private rulings dealing with GST issues were published on the Private Rulings Register. Set out below are my observations on selected rulings published this month plus a list of the rulings under various categories.

Observations on selected rulings

What is unimproved land? No. 1012197675444

Government entities selling land may obtain a significant benefit if the land was unimproved  (either being GST-free under s 38-445 or a valuation benefit under the margin scheme if the land was GST free as at 1 July 2000). Determining whether land is unimproved is often a controversial issue and guidance on the ATO view is found in GSTR 2006/6.    In this private ruling the issue was whether the supply of land by government entity is  GST-free under s 38-445 of the GST Act where the previous owners of the land build illegal structures on the land.

The applicant contended that the structures built on the land were illegal and therefore did not add value to the land. The ATO rejected this contention on the basis that the test of whether human intervention enhances the land is an objective test. Further, the illegal structures enhanced the value of the land because they remained the land and were in a useable or repairable condition.

The view of the ATO can be summarised in the following extract from the ruling:

Unimproved land is taken to be land in its natural state. We consider that the land in question has been changed from its natural state by the construction of these structures.

Given the breadth of the above statement, assume that an arsonist burns down a forest on government land, or illegally clears part of the forest. It is clear that the land in question has been changed from its natural state by reason of human intervention. If the value of the land is enhanced by those actions, does that mean the land is no longer unimproved?

LIST OF RULINGS

Taxable Supply

• GST and a levy included in a payment – whether GST applies to a levy included in a payment under a legal instrument – whether levy is consideration for a taxable supply
• GST and supplies made to joint venture participants – whether sales companies make a taxable supply to  joint venture participants where those participants on-sale the goods to non-resident third parties
• GST and solar energy credits – whether GST payable on State Solar Scheme credits received from an energy company where applicant registered for GST and has installed solar panels on roof of storage sheds – whether credits consideration for a taxable supply made to the energy company
• GST and prepared food provided as part of an enterprise – whether prepayment received for the purchase of prepared meals for customers as part of supplying a particular type of recreational asset is consideration for a taxable supply

Creditable acquisitions

• GST and entertainment expenses – whether a non-profit entity can claim input tax credits for the provision of food and drinks to guests who are not employees or associates of employees
• GST and temporary import of goods – whether entitled to claim input tax credits for GST paid on goods imported into Australia which are subsequently exported – effect of Division 171
• GST and input tax credits – whether entitled to input tax credits for the acquisition of an automatic teller machine (ATM) – where ATM acquired for investment purposes – whether acquired for creditable purpose

Real Property

• GST and improvements on the land – whether supply of land by government entity will be GST-free under s 38-445 of the GST Act where previous owners of the land build illegal structures on the land – whether land unimproved – whether margin scheme can be used
• GST and sale and leaseback of property – whether the sale to an associated entity and leaseback of property by a financial supply provider used to operate its business is a taxable supply – whether purchaser making a creditable acquisition
• GST and sale of property as a GST-free going concern or farm land – whether the sale of property leased to lessee who operates a farming business on the land, but where the lease is to cease on the sale, is GST-free as the sale of a going concern or as the supply of farm land
• GST and sale of farm land – whether GST is payable on the sale of farm land by partnership where farming is ceased 11 months prior to sale – whether vendors carrying on an enterprise and required to register for GST
• GST and the supply of residential premises – whether the receivers of a company acting as trustee of a partnership will be liable for GST under Division 58 or Division 105 if they sell the property of the company
• GST and supply of a going concern – whether the sale of property by a trust to a related super fund is GST-free as the supply of a going concern
• GST and the sale of residential premises – whether the sale of residential premises previously leased for commercial purposes but sold as vacant possession input taxed supply of residential premises
• GST and Property Development Agreement – whether payments received by  owner from developer under a Development Agreement are consideration for a taxable supply by the owner to the developer
• GST and valuation for margin scheme purposes – what is the relevant date for the purpose of calculating the margin for government owned vacant land
• GST and registration requirements, taxable supplies and the margin scheme – whether the sale of a hobby farm with Development Approval for subdivision subject to GST – whether carrying on an enterprise – whether required to register for GST
• GST and increasing adjustment relating to input tax credits – whether the assignee of the rights under a contract to purchase land from a non-registered vendor can use the purchase price for the purpose of applying the margin scheme – whether required to repay input tax credits for reimbursement to assignor of instalments already paid under the contract
• GST and margin scheme – whether developer can use the margin scheme where acquired farmland from owner in two transactions, first as a non-taxable supply and second as the supply of a going concern
• GST and subdivided land – whether making taxable supplies where subdivide a farm used to carry on the business of a horse stud and sell some vacant lots – whether sales made in the course of an enterprise carried on
• GST and supply of a going concern – whether the sale of a leasehold interest in crown land leased to a third party will be GST free as the supply of a going concern
• GST and sale of property – whether sale of vacant lot adjacent to residential premises a taxable supply – whether a realisation of capital asset
• GST and supply of newly constructed residential premises – whether supply of newly constructed residential premises under a development lease are input taxed – whether Commissioner will exercise discretion to refund overpaid GST – whether over-claimed input tax credits must be repaid
• GST and property transactions – whether entitled to input tax credits on the acquisition of property comprising two titles on which exists a residential house – whether GST payable on subsequent sale of house – whether GST payable if house demolished and sold
• GST and residential premises – whether the leasing of connected townhouses input taxed supplies

GST free

• GST and dessert products – whether the supply of dessert products is GST-fee as the supply of food – whether dessert products of the same “kind” as bakery products such as cakes, slices, cheesecake and puddings
• GST-free medical aids and applicances – whether the supply of electronically operated adjustable beds is GST-free under s 38-45(1) of the GST Act
• GST and international services – whether the supply of registry services by an australian company to a non-resident company are GST-free
• GST and food – whether supply of a product including flour and wholegrain cereals is GST-free as the supply food – whether product is similar to muesli bars or health bars – whether a breakfast food
• GST and supply of programming services – whether GST is payable on programming services  a non-resident company where services carried out at home office
• GST and supply to non-resident entity – whether GST payable on services to a non-resident entity that purchases goods from wholesalers in Australia
• GST and two food products – whether the supply of a product GST-free as the supply of dried bread or taxable as the supply of a savoury snack
• GST and student exchange program – whether the fees received from Australian students travelling overseas or overseas students travelling to Australia under student exchange program GST-free
• GST and nominal consideration – for the purposes of determining the methodology on whether the supply of membership services is GST-free under sub-paragraph 38-250(2)(b)(ii) of the GST Act whether required to take account of the entire amount paid for capital assets during the membership services or whether the cost should be apportioned over the period in which the assets are to be applied
• GST and going concern – whether the supply of interests in joint venture GST-free as the supply of a going concern
• GST and supply of training courses – whether the supply of training courses by a registered training organisation are GST-free under s 38-85 of the GST Act
• GST and the supply of education services to disabled children or students – whether the supply of courses specifically designed for children or students with disabilities are GST-free under s 38-85(a) of the GST Act
• GST and supply of professional services to another medical specialist – whether an on-call medical specialist makes a taxable supply when he bills the primary medical professional for the supply of a professional service on behalf of the primary medical professional
• GST and medical aids and appliances – whether the supply of product to assist with respiratory conditions GST free as the supply of a medical aid or appliance
• GST and education course – whether the supply of a nationally accredited training course is GST-free under s 38-85
• GST and supply of goods – whether the supply of goods is connected with Australia where a non-resident entity supplies the goods from a place outside Australia to a place of consignment in Australia under the Delivered at Place (DAP) Incoterms
• GST and supply of a right to receive a GST-free supply – whether the supply by a licensee to a client to attend a GST-free vendor course a gst-free supply under s 9-30(1)(b) of the GST Act
• GST and international services – whether the supply of the services of testing equipment and analysis of data to a non-resident company is GST-free – whether services connected with Australia
• GST and supplies connected with Australia – whether the supply of domain name registration services to either a third party Australian reseller or to an Australian customer is a taxable supply
• GST and education courses – whether supply of training course by Registered Training Organisation GST free
• GST and food classification – whether supply of food product used as ingredient in beverages, cake mixes and recipes is GST-free

Enterprise and Registration

• GST and the supply of tour services by tour operator in a passenger vehicle – whether required to be registered for GST in relation to an enterprise of taking paying passengers on food and wine tours where projected turnover does not exceed the threshold

Refunds of GST

• Refund of GST – whether the Commissioner will exercise his discretion under s 105-65 of Schedule 1 to the TAA where incorrectly accounted for GST in activity statements for supplies which are out of scope
• Refund of GST – whether the Commissioner will exercise his discretion under s 105-65 of Schedule 1 to the TAA where overpaid GST in activity statements where GST paid in respect of government charges paid on behalf of client
• Refund of overpaid GST – whether the supply by developer of in kind contributions to Australian government entity in return for the right to develop land taxable – whether Commissioner will exercise discretion in s 105-65 to refund overpaid GST

Other

• GST and reduced input tax credits for a life insurer – whether life insurer entitled to reduced input tax credits for acquisition of processing services for insurance applications and for medical assessment services
• GST and the supply of ATM services – whether entitled to RITC for acquisition from merchants of services related to the ongoing operability of ATMs on merchants’ premises