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Purchase commercial "mixed" property in individual name - register for GST?

Discussion in 'Commercial Property' started by liverpool77, 20th Sep, 2016.

  1. liverpool77

    liverpool77 Active Member

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    As title notes, when purchasing an IP in individual name do you need to register for GST? With this particular property note as follows from the sale contract:

    • Shop and Residence subject to existing tenancies (shop only $34k pa therefore below GST threshold - combined circa $58k pa).
    • Nil GST noted on sales contract.
    • GST: Taxable supply marked as "no".
    • GST-free because sale is supply of going concern under section 38-325 of GST Act.
    Whilst vendor is a Trust, I would assume it is registered for GST? Does this mean individual would have to register for GST to ensure no GST portion is paid on settlement? Or more thinking long-term, do you need to register for GST in the event you wanted to on-sell or develop down the track? As noted above, individual would be below the $75k threshold meaning maybe does not need to register for GST going forward however does this affect anything at date of exchange?

    Thanks
    Ritchie
     
  2. liverpool77

    liverpool77 Active Member

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    Spoke to accountant and view is given there is lease in place and it is a "going concern" it should therefore be GST free. No need for individual GST registration therefore ok to proceed.
     
  3. Stoffo

    Stoffo Well-Known Member

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    True, but if the lease says x rent + GST, then you will have to register to claim back any GST outgoings wont you ?
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    @liverpool77 - If you aren't registered for gst, you can't raise a tax invoice for the rent + gst. Does the lease allow you to gross up the rental to the equivalent amount?

    Is the tenant happy to pay a grossed up rent and not be able to claim gst on 1/11th of the cost? ie it will cost the tenant more as they can't claim the gst credits.
     
  5. Ross Forrester

    Ross Forrester Well-Known Member

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    To qualify for the going concern exemption the purchaser needs to be registered for GST (or required to be registered) 38-325 GST Act

    So you need to register
     
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  6. liverpool77

    liverpool77 Active Member

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    Thanks guys for your input.

    Stoffo/Scott - shop is on a residential lease so rent is already grossed up (i.e. $x per week no mention of GST). Could be an issue in the future so thanks for the heads up.

    Ross - Spoke to accountant and did register for GST in my personal name so should be ok here. Shop rent will be below threshold so no need to lodge BAS statements etc as under the $70k income threshold.
     
  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    Short answer Register !

    Long answer , buy it in an entity that's already registered rather than personal name.
     
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  8. liverpool77

    liverpool77 Active Member

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    Horses for courses....