Real Property. Real Talk.

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Welcome to the GST for property discussion board

GST obligations for property transactions can be a concern and we want to try and make it easy for people to get it right. As part of our ongoing GST and Property work, outlined on our Building Confidence site, we have set up this space to assist you to better understand your GST obligations in relation to buying, selling, leasing or developing property. We are here to help you get it right.

We’d like to hear from you on a range of elements relating to GST and property and how we can assist you further in correctly reporting your GST obligations on real property transactions. This is a space for you to share your feedback and ask us any questions you may have, whether you are:

  • a tax professional with clients who buy, sell, lease or develop property or are interested in doing so
  • a property developer who has been in the industry for years or is just starting out
  • a person who deals with property, even a one-off transaction, like subdividing land or buying property to renovate and sell.

We also held a live chat on Thursday 21 May on current issues surrounding GST and Property – the transcript of the chat is available here.

Your responses and views will help to inform and guide our decisions and future initiatives.

We look forward to hearing from you.

Graeme Mayne, Risk Manager, Property, GST

*You need to register to participate in site activities and receive project updates.

Welcome to the GST for property discussion board

GST obligations for property transactions can be a concern and we want to try and make it easy for people to get it right. As part of our ongoing GST and Property work, outlined on our Building Confidence site, we have set up this space to assist you to better understand your GST obligations in relation to buying, selling, leasing or developing property. We are here to help you get it right.

We’d like to hear from you on a range of elements relating to GST and property and how we can assist you further in correctly reporting your GST obligations on real property transactions. This is a space for you to share your feedback and ask us any questions you may have, whether you are:

  • a tax professional with clients who buy, sell, lease or develop property or are interested in doing so
  • a property developer who has been in the industry for years or is just starting out
  • a person who deals with property, even a one-off transaction, like subdividing land or buying property to renovate and sell.

We also held a live chat on Thursday 21 May on current issues surrounding GST and Property – the transcript of the chat is available here.

Your responses and views will help to inform and guide our decisions and future initiatives.

We look forward to hearing from you.

Graeme Mayne, Risk Manager, Property, GST

*You need to register to participate in site activities and receive project updates.

Discussion board

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Discussions: All (2) Open (2)
  • We understand that GST can be a concern when you are buying, selling, leasing or developing property.

    There is a range of information and tools to help you get your BAS right. Have you accessed any of these and do you find them useful?

    Is there anything missing that we could add to help you?

    Some of our tools and communication activities include:

    We understand that GST can be a concern when you are buying, selling, leasing or developing property.

    There is a range of information and tools to help you get your BAS right. Have you accessed any of these and do you find them useful?

    Is there anything missing that we could add to help you?

    Some of our tools and communication activities include:

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  • Live chat questions

    about 1 year ago 279 views
    During the live chat last week we received the following questions. Please find our responses below.

    Mgarrone - I'm interested in the ATO's current views regarding adjustment events for developers. Primarily around when a developer gets stuck with constructed residential premises that can't be realised. The developer then rents out those premises for a year or two until the market turns. It is often the case that the properties will need to be taken off the market for a short period. There is normally no intention whatsoever to rent long term but market forces tend to mean you... Continue reading

    During the live chat last week we received the following questions. Please find our responses below.

    Mgarrone - I'm interested in the ATO's current views regarding adjustment events for developers. Primarily around when a developer gets stuck with constructed residential premises that can't be realised. The developer then rents out those premises for a year or two until the market turns. It is often the case that the properties will need to be taken off the market for a short period. There is normally no intention whatsoever to rent long term but market forces tend to mean you need to take the properties off the market. It would be helpful to get more clear cut information on adjustment events in these difficult circumstances. I believe the current ATO view is that you at a minimum need to be able to show the properties are still up for sale in the market, the reality is that you normally need to take the properties off the market to avoid looking like a forced seller. While the market is hot at the moment most developers are realising their properties, however, this won't last forever and some will be caught out again. Any adjustment event of significance in these circumstances, if 100% GST claw back comes with significant cashflow problems for a developer already in a difficult place. I'm also interested in any changes to ATO administrative practices or likely review of the GST adjustment area given it's difficulties in practically applyication.

    Mgarrone, our view on selling new residential premises and GST Adjustments is in GST Ruling GSTR 2009/4. The ruling explains that new residential premises can be used concurrently where a developer leases the premises while still holding them for sale (this is referred to as ‘dual concurrent application’). In this case there is generally some claw back or denial of input tax credits for acquisitions related to leasing the premises. Though this is influenced by the extent to which the premises are used for leasing and the overall purpose of the developer. A developer might be able to objectively demonstrate its on-going plan is to sell the premises after temporarily leasing them meaning any claw back could be limited. For example, this may be the case where there is objective evidence that:

    • the developer’s financing arrangements are based on obtaining a positive return on its investment from the sale of the premises;
    • the developer’s on-going main intention, allowing for the temporary lease, is to sell the premises (e.g. there may be board minutes evidencing this if the developer is a company); or
    • there are lease terms allowing potential purchasers, upon reasonable notice, to inspect the property around the time the lease is about to expire.

    Our view on ‘dual concurrent application’ adopted in GST Ruling GSTR 2009/4 was developed following industry consultation and was a change to our earlier position (see paragraph 5). Also note that under Division 135 of the GST Act, an increasing adjustment can apply having the effect of clawing back GST, if leased residential premises are sold as a GST-free leasing enterprise (see GST Determination GSTD 2012/1 and our decision impact statement for Commissioner of Taxation v. MBI Properties Pty Ltd both available from the legal database on our website). No change to our administrative practice is currently planned, and at this stage, there’s no review of the adjustment provisions of the GST Act that we are aware of, noting however that law changes are a matter for Government. 

    Effie - My question relates to the margin scheme on property purchases & sales after 2008. In particular, what items are added to the cost price in the calculation of the GST?

    Effie, generally, when using the margin scheme to work out GST payable on selling a property that is both bought and sold after 2008, the cost base is the purchase price.

    However, this changes if the vendor purchased the property as a result of (1) a GST-free sale of a going concern; (2) a GST-free sale of farmland or (3) a non-taxable transaction from a GST-registered associate for no consideration. In these circumstances, when applying the margin scheme the vendor must include any value it and the previous owner (i.e. the supplier of the going concern/farmland or associate) added to the property. This is achieved by using the value of the property in the hands of the previous owner at a specific point in time as the cost base, depending on the previous owner’s individual circumstances. The possible cost bases are:

    1.  if the previous owner purchased the property before 1 July 2000 - an approved valuation, or the GST inclusive market value, of the property as at 1 July 2000; or

    2.  if the previous owner purchased the property after 1 July 2000 but was not registered for GST at that time - an approved valuation, or the GST inclusive market value, of the property at the time the previous owner became registered: or 

    3.  if the previous owner purchased the property after 1 July 2000 and was registered for GST at that time – (1) the consideration which the previous owner paid for purchasing the property; or (2) an approved valuation, or the GST inclusive market value, of the property at that time. 


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