GST Margin Scheme

Discussion in 'Development' started by mrdobalina, 25th Jun, 2015.

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  1. mrdobalina

    mrdobalina Well-Known Member

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    Just learnt today (after a meeting with my Accountant), that you need to sign the GST Annexure as part of the Offer & Acceptance in order to get the GST margin scheme.

    Easy thing to overlook which could have big financial impact.
     
    mrdobalina, 25th Jun, 2015
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  2. Terry_w

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

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    That is a bit vague. I assume you are talking about a contract for land? What state?
     
    Terry_w, 25th Jun, 2015
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  3. mrdobalina

    mrdobalina Well-Known Member

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    Sorry.... The context is around doing developments, and selling off units within a 5 year period. Where you normally get hit with GST on the sale of the new units, you can claim back the GST via the GST margin scheme.

    Just learnt today it's not automatic, and you need to make sure the buyer signs the GST Annexure as part of the Offer & Acceptance form.

    WA. Not sure if applicable in all states.
     
    mrdobalina, 25th Jun, 2015
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  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Not correct. A contract is a VENDOR prepared doc. They choose if the MS applies. And the buyer accepts the contract. Rule One and Two of contract law. Unless its vacant land or commercial its very rare that the MS affects a buyer. A buyer of resi prop cant claim GST anyway. Issue ??
     
    Paul@PAS, 26th Jun, 2015
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  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Incorrect. The contract is drawn by the vendor. And accepted by buyer. Rule 1 and 2 of contract law. The MS is agreed by BOTH. The MS only limits a GST input tax credit claim so a resi buyer or commercial buyer needs advice on how it affects them. If its resi should not affect anyone unless its comm resi.
     
    Paul@PAS, 26th Jun, 2015
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  6. mrdobalina

    mrdobalina Well-Known Member

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    There is an issue if you're the vendor, who has developed some units and sold them within 5 years.
     
    mrdobalina, 26th Jun, 2015
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  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    There can also be very logical reasons why you wont (or cant) use the margin scheme. When selling property to a GST registered entity (eg factory units, shops etc) then using the margin scheme may hamper sales. The buyer may want to pay GST and claim it back.

    Like all aspects of dev activities the tax strategies should be identified and planned early so that contracts reflect the best outcomes and help profits and rapid sale.

    A buyer would ensure their contract reflects their plan...ie GF shops sold with bGST and not under MS and apartments above under the MS. Strategies on when to claim GST on build also planned into the project.
     
    Paul@PAS, 26th Jun, 2015
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  8. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Yes, so you only need to use it when you are selling (when you are the Vendor) not when you are buying.

    Never sell without informing your accountant to make sure you do it right :D

    The Margin Scheme is a very powerful tool and will save you money.
     
    Westminster, 26th Jun, 2015
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