Apu has a GST win

Discussion in 'Accounting & Tax' started by Mike A, 12th Jan, 2020.

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  1. Mike A

    Mike A Accountant Business Member

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    Apu was concerned as he sold some vacant land and didn't realise he needed to pay GST on the sale.

    He hadn't put in writing that the margin scheme would apply to the sale and he is having sleepless night about his GST liability. What can Apu do ?

    Many people think that GST only applies to new property. However what is sometimes forgotten is that GST can also apply to the sale of vacant land. Really ? Yes really.

    Apu didn't realise this and so didn't even think about whether he should use the margin scheme to reduce his GST liability on sale.

    Fortunately Apu went to see his friends adviser who told him that it is possible to seek the Commissioner's discretion to apply the margin scheme to the sale. Apu got the appropriate documentation in place and sought the Commissioner's discretion and was able to reduce his GST liability.

    Apu spent the next few nights sleeping soundly.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Does that apply if Apu subdivided his block many years ago and transferred block A to his ex back in 2006 but has held onto block B until now? Does the 5 year holding rule for gst on bee buildings apply to land developments or is this untested?
     
  3. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Does that apply if Apu subdivided his block many years ago and transferred block A to his ex back in 2006 but has held onto block B until now? Does the 5 year holding rule for gst on bee buildings apply to land developments or is this untested?

    The transfer to the spouse would be a CGT concern. Apu is the initial owner. If Apu conducts a enterprise then a SUPPLY is what is subject to GST. Market value is also taken to be the consideration for GST purposes. Apu may remain liable and subject to penalties as the vendor. It is also a income tax event. If it were a private transaction it may fall outside an enterprise. However some for of tax issue would arise.

    Land is never subject to a 5 year rule. The 5 years refers to continual input taxed rental income. Many get that wroing too and listing if for sale while rented wont count.
     
    Last edited: 13th Jan, 2020
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    There doesn't seem to be any mention of Apu transferring to a spouse, and this post was about GST not CGT.