GST payable on 3 block sub division

Discussion in 'Accounting & Tax' started by Scott Townsend, 5th Jul, 2019.

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  1. Scott Townsend

    Scott Townsend Well-Known Member

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    16th Aug, 2015
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    Perth
    Hi all, I have a scenario that I’m a little unclear on my exact options.

    Looking to purchase a site that will split into 3 blocks to then on sell vacant land.

    Purchase cost approx $500k, sub div costs, holding costs, stamps etc etc etc approx $100k.

    Sale price of 3 blocks total $700k.

    On what is GST payable? I have been told gross sale price minus any expenses that we were charged GST? Or is GST just payable on profit?

    How does the margin scheme work as I’ve heard there are 2 options in how we pay the gst.

    Any info or links would be great!

    Scott
     
    Scott Townsend, 5th Jul, 2019
    #1
  2. Terry_w

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

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    GST on the sale price generally
    Margin scheme might apply to reduce this

    Seek tax advice.
     
    Terry_w, 5th Jul, 2019
    #2
  3. Mike A

    Mike A Well-Known Member

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    margin scheme could potentially be applied. margin is the difference between the purchase price (apportioned on a reasonable basis in your case) and sales price.

    generally the purchaser will withhold 7% of the sales price and that will be remitted directly to the ATO on settlement. will then be up to you to work out the real margin and apply for a refund of any difference (if any)
     
    Mike A, 6th Jul, 2019
    #3
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