Proposed amendments to GST and residential premises: consultation paper released

On 27 January 2011, the Assistant Treasurer released a consultation paper seeking submissions on the Government intentions to retrospectively amend the GST law in relation to the residential premises. The proposed changes are in response to the Full Federal Court's decision in FCT v Gloxinia Investments (Trustee) (2010) 75 ATR 806, reported at 2010 WTB 23 [902].

The consultation paper is on the Treasury website.

Proposed amendments

The Government is proposing to amend s 40-75 of the GST Act to:

  • clarify that new residential premises constructed under development lease arrangements since 3 October 2007 are taxable supplies. A transitional arrangement would be implemented to ensure taxpayers are not inadvertently disadvantaged by the retrospective application of the amendment;
  • ensure that, from 1 July 2000, the granting of individual strata lot leases over newly constructed residential premises is not sufficient by itself to make future supplies of the premises input taxed; and
  • ensure that, from 1 July 2000, a change in property title arrangements of real property comprising residential premises (eg subdivision of land) will not result in the premises once again becoming new residential premises and being subject to GST if they are subsequently sold.

Alternative approach

Alternatively, the Government is proposing to amend s 40-75 with a general principle, which may comprise the following components:

  • new residential premises are residential premises that have not previously been sold as residential premises (other than commercial residential premises), or the subject of a long-term lease, to an end user;
  • a freehold or long-term leasehold interest in residential premises arising from the subdivision of residential premises that have previously been sold, or the subject of a long-term lease, to an end user will not be a freehold or long-term leasehold interest in new residential premises; and
  • an end user is a person who uses the residential premises for personal use, or for the predominant purpose of making supplies of residential rent under s 40-35 of the GST Act.

The Government says the principle-based amendments would apply retrospectively from 1 July 2000. It also says a transitional provision would be required.


Comments on the consultation paper are due by 25 February 2011 and should be sent to: General Manager, Indirect Tax Division, The Treasury, Langton Crescent, PARKES ACT 2600; Email: Enquiries should be directed to Michael Harms on (02) 6263 3308.


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