GST on Resale of vacant land

Discussion in 'Accounting & Tax' started by GenericName, 19th Oct, 2018.

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  1. GenericName

    GenericName Active Member

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    Hi Guys,

    I'm selling a vacant residential zoned allotment, which i initially purchased to build a house. (i was tossing up if i was to move in, or lease out). Due to recent events i have decided to sell the allotment, which is not improved. I purchased a new residential allotment where the vendor was a developer .

    I am trying to determine if the allotment is GST applicable. If so, how do i charge, and or claim back GST i have paid. I also believe if this does form taxable supply how do i register for a ABN as a person who is then on selling the allotment.

    The advise i have been given from my accountant is this

    " As you are selling land only, it is not a taxable supply, there is not GST on land" i have NFI what that means.

    Side note - I'm looking for a new accountant too.

    Any assistance would be awesome.
     
  2. Mike A

    Mike A Well-Known Member

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    It comes down to the definition of whether it was in the course or furtherance of an enterprise. There can be gst on land so that is not correct advice.

    If it was land on which you planned to build your main residence or an investment.property and hold long term then it.doesnt sound like it meets the definition.

    In those cases would be input taxed and.no gst.on.sale. would just need to see what evidence you had to show those.intentions.
     
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  3. GenericName

    GenericName Active Member

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    Thanks MikeLivingTheDream,

    The Goal was to either build a house, or an investment and hold long term (which is identical to the duplexes i've built previously).

    I don't know how i would be able to prove this though, outside of conversations with accountant and broker?
     
  4. Mike A

    Mike A Well-Known Member

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    If you have had prior history of development the ato would look at it more closely.

    Email trails between your broker and accountant ? Emails between other parties showing those intentions ?

    Is property in your name or partners name ? Developments generally held in a company or trust ? Might show a difference in intentions ?

    Enquiries with council documented ?
     
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  5. GenericName

    GenericName Active Member

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    The prior history i have is all buying and holding, there isnt any flipping of property. The shortest period of time ive held and resold a property is 3 years.

    I intended to hold this one long term, and live in or rent out. Which is basically the model i've used fr several years,

    If on the other hand i need to register for GST prior to onselling how do i do that.

    Reason being is i bought this property in 2016 (off the plan vacant land) in my personal name, settled last month. Basically im not wanting to keep this property now, and will be selling for $5,000 more than i purchased it for (making a loss on the property). PP$ 285,000 - Sale price $290,000. Contracts were due to exchange today, however, this issue came about
     
  6. Mike A

    Mike A Well-Known Member

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    Understand why you are looking elsewhere
     
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  7. Paul@PAS

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

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    Doesnt sound like an enterprise.

    The accountants simple view is quite wrong. The key issue is whether there is an enterprise. If not, the supply isnt taxable. Vacant land otherwise CAN be a taxable supply. To say land isnt taxable (GST) is just wrong. Good you are seeking a new adviser. The quoted comment is just wrong.
     
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  8. Terry_w

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

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    prob not an enterprise and no gst would need to be collected on sale, but seek specific advice.
     
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