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Hi Doug,
I suggest you need to be a lot more specific about your requirements to get a better response. Are you searching for taxation advice? Are you after investment structuring advice? Generally, the more specific you are with your question the better answer you will receive.
Just because I am an accountant I would like to point out to everyone who reads this that there is no such industry designation as a property accountant. There is a lot of investment property ownership in Australia, enough to make the claim that most, if not all, accountants would have adequate experience with property to satisfy your needs. So, the more specific you can be with your requirements, the more likely you are to get a name and phone number of an adviser who can be of assistance with your specific requirements. If you do not have specific requirements then perhaps you do not need a specialist after all. Please think about what you really need and ask specific, detailed questions. Thanks
Hi Juvanix,
There seem to be logic errors in your original explanation. I am not sure if this is my confusion or your misunderstanding of the facts. See if you can follow my logic. This is the statement I have a problem with:
"-Purchase property in June 2009, under a unit trust structure, registered for GST, sale was through a 'mum and dad' party with 10%GST included. Unit Trust did not pay any GST to the ATO as it was purchased from a non-entity."
Firstly, "sale was through a 'mum and dad' party with 10%GST included" – This mum and dad entity must have been registered for GST to charge you GST. It is not lawful to charge GST unless you are registered. I find it difficult to believe your advisers would not have checked this at the time. Don't rely upon them, check for yourself http://www.abr.gov.au
Secondly, "Unit Trust did not pay any GST to the ATO as it was purchased from a non-entity." Your previous statement says that 10% GST was included. The very next statement says it wasn't. I hope you can see my confusion.
Lastly, if your Unit Trust did pay GST to the ATO at the sale then your Unit Trust may be entitled to a refund. This has nothing to do with the entity you purchased from, it is dependent only on your Unit Trust's GST status. If, however, your Unit Trust did not pay GST at the original sale then no refund could be claimed.
Now for the difficult question of whether or not your current accountant seems barmy or not. One of the telling factors in any professional person is being able to make clear difficult or complex situations for their clients. I suggest that you may have to have a longer chat with your accountant and ask as many questions as you can think of until you are satisfied that you have the answers you need. I am not suggesting these answers will all be in your favour but at least they should be clear to you. To answer the question, YES, some residential premises are input taxed sales. I suggest you go back to him for explanations. He has all your relevant documentation and information. Ask him what are the circumstances around which residential properties are input taxed supplies and which are not, generally. Then have him apply that, to your satisfaction, to your Unit Trust property in question. Remember he is there to serve your interests, you are the client. Just to clarify a little if the property was used as a motel, for example, ie commercial residential accommodation it would be an input taxed sale. if not commercial then it is unlikely that GST is applicable. The relevant section is below;
Section 40-65 of the GST Act provides that sales of residential premises are not subject to GST, if the residential property is to be used "predominantly" for residential accommodation.
I hope this helps you
kind regards
Are you registered for GST? Are you part of the Margin Scheme? Is this a one off subdivision and sale? If so, perhaps you could consider applying for a private binding ruling about GST on the sale of the subdivided block. I went through the same exercise and the fact that I had the private binding ruling stating that I was not in the Margin Scheme and this sale was not part of my normal business activities ie a one off was the only thing that stopped the ATO applying GST to the transaction. I am a tax accountant so had done my homework in this respect. I suggest you find someone, a tax accountant, put the whole scenario to them and ask for a private binding ruling. Bear in mind you will be stuck with the consequences of that ruling even if it does not go your way.
To answer your question, there is insufficient information to give you an idea of the quantum of CGT you will have to pay. Your post should include your normal taxable income also. When you sell a capital gain or loss is calculated. The gain, if any, is applied to your taxable income. So you would need to supply your normal income and the amount of the gain to be able to give a simple answer to the amount of CGT payable. If the time between purchase and sale is less than 12 months any gain is the gain that is used ie no discounts or indexation can apply. NB: Terry is correct, the subdivision is not a CGT event where a gain/loss is calculated.
Good Luck
