On 12 November 2014, the ATO released for public comment by 9 January 2015 draft GST ruling GSTR 2014/D5 entitled "Goods and services tax: development lease arrangements with government agencies".
The draft Ruling explains the GST treatment of particular transactions arising in the context of development lease arrangements entered into between government agencies and private developers. These arrangements typically have the following features:
- the private developer (developer) undertaking a development on land owned by a government agency in accordance with the terms of a written agreement between the developer and the government agency, and
- the government agency supplying the land by way of freehold or grant of a long-term lease to the developer subject to the developer undertaking the development in accordance with the terms of the written agreement. That is, the developer becomes entitled to transfer of the freehold or grant of a long-term lease when the development is completed.
The draft Ruling does not apply to development lease arrangements that do not involve a government agency. The GST implications of arrangements not involving government agencies depend on the features of the particular arrangement in question. However, the Commissioner says that a number of the principles outlined in the draft Ruling may also be applicable to similar arrangements involving private entities only.