Guidance on GST and Property Transactions
Goods and Services Tax (GST) can impact on your property transaction. Here are the common GST terms used in a property transaction:
Input-taxed: Most residential property sales are input taxed. An input taxed transaction is one which the supplier/seller cannot charge GST on the sale price and cannot claim GST on any GST incurred in relation to the supply/sale.
Property transactions that are input-taxed include: sale of residential property that is not new residential property, the supply of residential premises for rent, supply of premises by way of a long term lease, mere subdivision of property as opposed to the partition (transfer between co-owners) of the subdivided property into lots.
Taxable supply: A supply/sale is taxable if : the supply/sale is made for consideration, the supply is made in the course of the business of the supplier, and the supplier is registered for GST.
A taxable supply is subject to GST .
Property transactions that are taxable supplies include: the supply/sale of commercial property (any non residential property), the sale of new residential premises (as defined in the GST Act), the supply of commercial premises for rent.
GST Free supplies: GST free supplies are those supplies defined as GST free in Division 38 of the GST Act.
Property transactions that are GST free include: Sale of commercial property subject to a lease that is a sale of a “going concern” as that term is defined in the GST Act, …….
Margin scheme: For taxable supplies, the margin scheme can be applied, particularly by developers. Instead of GST being calculated on the selling price, it’s based on the margin between the selling price and the price paid for the property in an earlier transaction.
