Issue #13
Urgent: Property Developers & GST
Critical ATO change to dealing with GST credits where properties are built for sale, cannot be sold and instead are rented pending sale.
The ATO has just released an ATO ID which significantly changes the public position advocated since the inception of GST dealing with how to treat input tax credits where a property is built for sale but subsequently rented pending sale.
The ATO position is significantly more favourable for taxpayers.
The ATO ID considers the following common scenario:
- a property is developed with the original intention to sell all completed properties;
- full GST credits are claimed
- on completion not all properties are sold, and some are rented out to assist meeting holding costs;
- while being rented, the properties continue to be held and marketed for sale.
The general ATO view has been that when the property is rented, 100% of the GST credits claimed relating to the construction of the property needed to be paid to the ATO as a GST adjustment.
The ATO ID provides that only a minimal GST adjustment is required.
As the changed position is a significant concession any taxpayer that has self assessed or been assessed by the ATO under the previously advocated position should urgently review their position with a view to seeking refunds of any GST credits previously adjusted.
This edition of ‘The Assessment‘ was prepared by Simon Calabria and Michael Doran.
If you have any comments in regards to the contents of this edition please feel free to contact Simon at simonc@webbmartinconsulting.com.au or Michael at michaeld@webbmartinconsulting.com.au
