GST margin scheme

If I buy vacant land as a trust registered for GST from an individual who isn’t registered for GST, can I use the margin scheme if I get them to sign a declaration in the sales contract saying “purchase made under margin scheme”? And then I can claim GST on construction costs of building an investment property as normal?

 

No. You dont understand how the margin scheme works. No lawyer would add that clause as it totally unnecessary and incorrect. The SALE contract if you dispose of the land or the new premises may need special clauses. Seek advice. The attached reading may assist.

GST credits can only be claimed if you are selling new resi premises. Building a property to keep means you dont have right to a ABN and cannot claim tax credits in whole or even in part.

These questions often act as caution that seeking personal advice early will ultimately avoid a lot of mistakes and costly errors.In its worst case, you can be eligible to use the margin scheme and the tax credits and lose entitlement to both.

 

Thanks Paul. I should have explained I am going to sell the property as soon as constructed for a profit so from your attachment I concluded I would be an enterprise. In this case, from what I have read online, I’d need a clause in my purchase about the margin scheme in my purchase contract so I can use the margin scheme when selling? What do you think?

 

Wrong. 100% wrong. Why has that anything to do with the vendor ?

 

Hi Paul, thanks for your help so far. After reading more about the margin scheme I agree I had that wrong above. I’m asking questions about a block i am looking to purchase and develop so if I get closer to purchasing I might give you a call on the number in the attachment to get some comprehensive advice on my situation.

 

If you buy a land from an unregistered vendor and your later on resell that land: you are likely to access the margin scheme.

Their is no requirement to document the process from a the vendor.