Hi everyone,
We are about to put our house on the market.
Originally we built it with the intention of living in it, however that didn't happen for a variety of reasons and we tenanted the property from day 1.
By the time it goes on hte market it would have been finished and rented for 2 years. My question is, will the ATO view this as a development and require us to pay GST when we sell? I don't think there will be any profit from the sale.
It is the only house we own, and I would certainly not consider myself a developer!
Thanks,
Jess
It depends on a number of questions:
Firstly, you have mentioned your intention was toi live in the property. You therefore weren't developing with the goal of making a profit. Also, it is a one-off development, not an ongoing business.
I think you would be fine to argue that you are not in the business of developing property, so no GST should be payable on sale.
Simple, are you registered for GST? Did you pay GST to the builder/suppliers/subbies? Have you claimed GST credits during construction?
It is more than likely that you have already paid GST on the construction and as you will not be making a profit, it is probable that you won't have a gst liability.
Dan
What about s 40.65 of the GST Act which states new residential premises are not input taxed. New residential premises is defined in s40.75 as not been previously sold – within 5 years.
If they are not input taxed and not GST free then wouldn't GST apply? Is intention relevant here?
ps I hope not!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry,
From s40-65 and s40-75, I agree, it would be a taxable supply. But I think it would only be a taxable supply if you are registered, or required to be registered for GST.
I think intention is relevant, in that it shows there was no business of development. The GST Act requires you to be registered if you are carrying on an enterprise in Australia with a GST turnover of at least $75,000. I would say Jess is not carrying on an enterprise, so there is no need to register for GST.
So it's a GST sale, but there is no requirement to pay any GST as Jess doesn't need to be registered.
Dan
Thanks Dan
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks so much for your responses! It seems there are just no hard and fast rules with the ATO, so it pays to see a few educated opinions.
no
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