GST included within rental payments

Hi,

I have two units which I rent to an international company who are contracted by the Federal Govt to supply services.

Both units are very positively geared and are in my own name (since reading Steve McKnights book Ithink I should have set up Discretionary Family Trust)

The units are rented as 'serviced apartments' in that they pay $270 per night PLUS GST of $27. The serviced apartment includes all furniture, power, water, Foxtel, cleaning etc.

I do not want the GST component as this means I have to set myself up to collect the GST and then have to submit BAS etc. My accountant advises they do no have to pay GST but the management company said because the income exceeds $75k/yr they are considered to not technically be residential leases and GST must be paid. I think I may be a case of the management company finding it too difficult to alter the current GST arrangements

I have tried to get the GST removed but the international company insist on including this element within the tenancy agreement. I do not have direct access to them due to the usual beauracracy with govt contractors.

Will this GST inclusion cause me any issues other than the BAS requirements?

What will be my yearly requirements for the GST?

I have got advice from my accountant so thought i would see if anyone else has some experience re this situation.

Thanks in advance

Brad

Register your abn & for gst. Make one remittance each year. Not that hard. Should take less than 1/2 hr if you keep your records properly.

I am opinionated. Take me at face value, read between the lines.

http://www.reao.com.au/forum/entry.php?80-How-bright-is-your-agent

Tricky one.

At least you should be able to hold onto the GST for a while in your offset account and it will help you save interest on your home loans.

Regards

Terryw

Thanks Scott & Terry.

There are some benefits in the GST as was mentioned by Terry re the funds in the offset.

From this scenario can you foresee any issues when/if I sell the property with collecting GST?

Also, as I am registered for GST can I claim back any GST payments I have made for services or will this be included in the write off re repairs/maintenance to reduce taxable income.

Thanks

Brad

GST doesn't normally apply to residential property, but because the property is a serviced apartment then it might, especially if they are insisting on charging GST to the tenant.

You should get tax advice on this as it would be painful to find out that 10% of the sale price would need to be given to the ATO.

Regards

Terryw

Thanks Terry.

When you say 10% of the sale price do you mean the sale price of the property? I will follow this up with my accountant but it would be interesting how CGT applies if 10% is also applied.

Thanks

yes

Regards

Terryw