GST and Land Sales

[leicachamp]

Help guys, i am confused as hell. Tried to get answers from Real estate agents as well as accountants and no one really has any answers.

The situation is as follows. 1) Puchased vacant land for $95k with no GST. 2)I have since got plans to build 2 units. 3) i am selling the land with plans for $137k.


Note: The land is purchased under a company that has many property holdings but is not registered for GST and has never sold any real estate before.

Q1: Is there GST applicable to the land Sale?

Q2: If there is, is the GST on the sale price or just the difference in my purchase price and sale price.


Thanks in advance for any info.

 

[Mry]

Generally, land purchased with an intention to resell at a profit is subject to GST. MT 2006/1 para 270.

The difficulty here is that you have purchased land with the intent to build an investment property, and then that intention changed. On the face of it it seems to be a 'mere realisation' on capital account of an isolated transaction because of your intentions so I don't believe GST should be charged.

But if your original intention was to sell, or you do it again, the answer may change.

 

[leicachamp]

Thanks for the info.

I can show that I have never sold anything through the company in the past, just got it for holding properties. I did intend to build and hold, but alas, the figures did not add up in the end.