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Registering for GST

Discussion in 'Accounting & Tax' started by dismith, 12th Jul, 2015.

  1. dismith

    dismith Member

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    Hello all,
    I will speak to my accountant tomorrow, in the meantime I am wondering when the more experienced than I registered for GST and what implications it may have had for you.

    My scenario:
    1 IP returning approx $36,000.00 per annum gross

    Have just signed a contract on another which will return approx $13,000 p.a gross and have offers in on another, therefore I will hit the GST threshold fairly quickly now.

    I imagine it's a question those of us new to investing would be interested in, could find anything in the search to cover it. Though being a new forum ( great job too) It may be helpful to others.

    Cheers and thanks
    Di
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    The IP you have, is it a residential or commercial property? Ie it has people living in it or a business operating from it?

    If residential then forget all about GST :)
     
  3. dismith

    dismith Member

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    Thanks,
    Residential only
    Not quite brave enough for commercial at this stage!
     
  4. geoffw

    geoffw Moderator Staff Member

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    D.T. is correct. GST does not apply to residential rents. You do not have to register.
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    If you registered for an ABN you should cancel it.
     
  6. dismith

    dismith Member

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    Thanks folks, I resisted the urge to register for an ABN last night and am over it now ta.
    Cheers
    Di
     
  7. Pistonbroke

    Pistonbroke Well-Known Member

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    Totally unnecessary for residential property owners. Don't act in haste or without advice from your accountant &/or solicitor.
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    For anyone who builds a residence (or a substantial reno of a former shed, stable, unit, factory, home, etc) and considers a possible sale of the site or any part of it within 6 years I suggest they get tax advice as an ABN and GST may well be important factors to consider in the planning.

    You don't want to plan around the problem in 1, 2,3,4 or five years time when you change your mind. Your options will be limited by then.
     
  9. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Not always.. Careful with saying never. GST and ABN issues can occur with residential but not if its an residence when purchased. ABNs and GST have no relevance for a passive investor unless they build the property and even then it has catches and more not apply. More likely when a substantial reno, a new build, duplex, dev etc occurs.
     
  10. dismith

    dismith Member

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    Thanks for the differing opinions and lines of thought.

    My accountant feels I should not. I guess my concern is motivated by the 1st IP being a holiday let unit, which I would not do again. I purchased it as I believe the CG will be reasonable as I purchased well below market value ( even my bank manager keeps asking if I have found any more deals like that, if do and I pass can I let him know).
    The problem as I'm sure you all know is that every mortal thing is charged out and all attracts GST, from replacement light globes to toilet brushes. Currently the annual GST component is in excess of $1,500.00 per annum.

    Thanks again.
    Di
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    That changes everything!
     
  12. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Yes - GST impacts all resi property but some residential properties more than others. Residential rents are input taxed which basically means you wear the GST as an erosion of yield but there is no GST imposed on income. Typically GST would be included within strata levies, R&M, replacement items for a holiday let, capital items and agency charges and would amount to maybe $350pa. You can be lucky sometimes and the agency use a tradie who isn't reg for GST ie cleaning, repair but alas most are. You just have to ignore the word GST and accept it cannot be claimed. At all. I wishes agencies didn't separately show it. There is no reason to, except if its a commercial rent. And most agencies incorrect show it any way. ie they show GST on their agency fees but not on R&M, strata etc.

    I would find $1500pa in GST extraordinary unless there was major capital works under strata and then those levies would be special levies and non-deductible anyway. $1500 in GST suggests that the "taxable supplies" you are paying for would be $16500.
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    But if the unit is a holiday unit the rents could be subject to GST. Could be commercial residential if similar to a hotel arrangement.

    Depends on the situation though
     
  14. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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