New Residential Property
Will the supply of a new apartment to a foreign purchaser be GST-free? Is the supply an export?
No, the supply of real property is excluded from the GST-free treatment given by Subdivision 38E (which deals with exports) and so supply of real property to a foreign purchaser will not be GST-free.
An owner builder built his own home in 1999 and now wishes to sell. What is the GST position?
The home, never having been sold as a residence before (and built after 2 December, 1998) will qualify as ‘new residential premises’ and attract GST but only if the supply is a ‘taxable supply’ in the first place. Whether or not the supply is taxable depends on whether the owner builder is registered or required to be registered for GST and the sale is in the course or furtherance of an enterprise. A person who is not carrying on an enterprise but takes out a building permit in his or her own name would not satisfy these criteria whereas a builder who builds a house, lives in it for some time and then sells it and moves on to the next project would clearly be carrying on an enterprise and so the supply would be taxable.
A client is purchasing a residential unit off the plan from a developer and considering re-selling to someone else with settlement to occur at the same time as the first settlement. Will the sale by the client be the sale of new residential premises (and subject to GST) or of existing residential premises (and not subject to GST) in these circumstances?
The sale by the client will be of existing residential premises and therefore not subject to the GST.
A builder client has just completed two new residential units and wonders if he rents them out and sells them in 5 years time will they still be treated as ‘new residential premises’ and taxable?
The meaning of 'new residential premises' in s.40-75 has been amended to exclude premises that have been used for making input taxed supplies (e.g. residential rents) for at least 5 years after they became new residential premises. This would mean, when the builder sells, GST will not be payable; the supply will be a supply of existing residential premises and input taxed. However, if the builder has claimed input tax credits in relation to the development, it will have an increasing adjustment under Division 129 when the letting commences.
A vendor client is selling a property on one title which consists of a shop at ground level and a dwelling above the shop. How will this be treated for GST purposes?
Assuming the conditions for a taxable supply exist, there will need to be an apportionment of the price for the supply of the premises as the residential component will be input taxed and the commercial component taxable. The apportionment may be made on any reasonable arms-length commercial basis (e.g. valuation, appraisal by an estate agent). A record of the basis of the apportionment should be included in the contract.
Can a new serviced apartment be sold as the supply of a going concern to an individual investor?
Although it is possible for a GST registered vendor to sell on this basis, the sting in the tail is Division 135 of the GST Act which will make the GST registered purchaser liable for an increasing adjustment of the full amount of GST as soon as the premises are used to make anything other than taxable or GST-free supplies (ie. immediately).
A client has purchased a block of land and built a new house on it for the purpose of resale and which he now wishes to sell. The client is not a builder or a developer - this is a ‘one off’ project. The client is not registered for GST. Will the sale of the house be subject to GST?
Yes, the sale of the house will be subject to GST. Even though the client is not registered for GST, the client is required to be registered. Building a house with a view to sale and profit, even as a ‘one off’ project, is a clear example of enterprise within the meaning of section 9-20 of the GST Act. Enterprise may constitute a single activity.
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