澳洲Australia property GST payable | Sydney


在澳大利亚 Ok, keen for some perspective on undermount vs drop in kitchen sinks. I know this topic has been discussed before, and in my view undermounts are a far superior result. However, is it worthwhile for an investment property, bearing in mind th ANZ have charged me a govt. mortgage registration fee of $115 for a refinance - borrowing additional funds for construction on a block of land in QLD already mortgaged with ANZ. There were NO mortgage documents to sign with the new loan docs


If I purchase a block of land and have a builder build 3 or 4 units on it, who pays GST? Is it me alone? The builder only? Or both of us? Thanks in anticipation for any replies. :confused:  

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rocko said: ↑
If I purchase a block of land and have a builder build 3 or 4 units on it, who pays GST? Is it me alone? The builder only? Or both of us? Thanks in anticipation for any replies. :confused:Click to expand...
If you buy a block of land there is no GST.

If you engage a builder to build on it for you. Then he will be invoicing you for the progress payments which will include GST - so you will be paying GST along the way to the builder. The builder will be claiming GST credits on his input costs (not that this is any part of your transactions with him - that's just what he does in his business).

If you sell the units, then you must charge GST in the sales price. This means that the person you sell to is paying the GST to you. You must then remit the GST to the ATO, however, you can claim the GST you paid to the builder on your progress payments to him as GST credits.

If you keep the units, then you cannot cliam GST credits on the build but neither do you charge anyone GST on the sales price as long as you have kept the units for 5 years as rental properties.  

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Is it new land?  

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Thank you Propertunity.
Terryw, No it's not new. There's an old house on it.  

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Propertunity said: ↑
If you buy a block of land there is no GST.

If you engage a builder to build on it for you. Then he will be invoicing you for the progress payments which will include GST - so you will be paying GST along the way to the builder. The builder will be claiming GST credits on his input costs (not that this is any part of your transactions with him - that's just what he does in his business).

If you sell the units, then you must charge GST in the sales price. This means that the person you sell to is paying the GST to you. You must then remit the GST to the ATO, however, you can claim the GST you paid to the builder on your progress payments to him as GST credits.

If you keep the units, then you cannot cliam GST credits on the build but neither do you charge anyone GST on the sales price as long as you have kept the units for 5 years as rental properties.Click to expand...
Great answer Propertunity. So clear and concise. Kudos to you :)  

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Just to add - when calculating the GST payable upon sale, you can elect to use the margin scheme. This should reduce the amount of GST payable to the ATO.  

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What if you keep them for rental for less than 5 years? Is there a different between keeping them for 1 vs 4 years?

And aaron could you please explain the margin scheme?

thank you  

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Margin Scheme is used to avoid GST being paid on residential land (Which should be GST exempt). So for example:

You buy land for $1m. You then build townhouses on it, and sell the final product for $3m. Under the margin scheme, you only have to pay GST on the 'margin' - that is, the final value of the townhouses minus the value of the land when you bought it. The value of the land excludes any stamp duty/improvements made.

So in this case, the 'margin' is $3m - $1m = $2m. So you calculate the GST payable by dividing $2m by 11 = $180,000. This is much less than if you just applied GST to the entire $3m which would've made you pay $270,000 in GST.  

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Aaron_C said: ↑
The value of the land excludes any stamp duty/improvements made.Click to expand...
Aaron,

In your example does it matter if the original 1M is for vacant land or for land plus a house that you demolish later on?

If the situation is that you develop a site worth 1M but you actually purchased it for 800K two years earlier, how is the margin scheme used?

Thank you  

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If you paid $800k, then it is $800 k not $1m.  

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evan1875 said: ↑
Aaron,

In your example does it matter if the original 1M is for vacant land or for land plus a house that you demolish later on?Click to expand...
It is the value of the land+building when you bought it so it includes the house (if any).  

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Thanks guys for clearing this up.  

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Aaron_C said: ↑
Margin Scheme is used to avoid GST being paid on residential land (Which should be GST exempt). So for example:

You buy land for $1m. You then build townhouses on it, and sell the final product for $3m. Under the margin scheme, you only have to pay GST on the 'margin' - that is, the final value of the townhouses minus the value of the land when you bought it. The value of the land excludes any stamp duty/improvements made.

So in this case, the 'margin' is $3m - $1m = $2m. So you calculate the GST payable by dividing $2m by 11 = $180,000. This is much less than if you just applied GST to the entire $3m which would've made you pay $270,000 in GST.Click to expand...
Hi Aaron,

Can you still use the margin scheme if you bought the original land in a company name?

Example: My bf is a builder so if he bought land in his company name for say $200K then built a spec home on it for $300K and sold the house for $600K what does he pay the GST on?

Does he pay it on the whole $600K or can he use the margin scheme and pay GST on the $400K?  

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Angel13 said: ↑
Hi Aaron,

Can you still use the margin scheme if you bought the original land in a company name?

Example: My bf is a builder so if he bought land in his company name for say $200K then built a spec home on it for $300K and sold the house for $600K what does he pay the GST on?

Does he pay it on the whole $600K or can he use the margin scheme and pay GST on the $400K?Click to expand...
Angel,

It depends. If he bought the land as residential and did not pay GST on the purchase, then he can use the margin scheme to pay GST on the 400k only. If he purchased the land and it did attract GST then it gets more complicated. I'm not the expert on this area but that's how I understand it.  

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