All Topics / The Treasure Chest / GST – Yes or No?

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  • Profile photo of jempirejempire
    Participant
    @jempire
    Join Date: 2001
    Post Count: 19
    June 24, 2003 - 2:54 am

    Hi

    A quick question. Im setting up my property structure and I would like to know, should the trust be registered for GST?

    Thanks
    Shane

    Profile photo of truebluetrueblue
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    @trueblue
    Join Date: 2003
    Post Count: 142
    June 24, 2003 - 3:26 am

    Depends on whether your IP’s are residential or commercial. If you have a commercial property and/or your income from residential property exceed $50,000, then you’ll need to register for GST. Otherwise, there’s no need to.

    Profile photo of davidfemiadavidfemia
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    @davidfemia
    Join Date: 2003
    Post Count: 89
    June 24, 2003 - 5:56 am

    Actually, you may want to consider it regardless. I find property trusts to be like a business, and therefore treated as such.

    Should you register for GST, you will be able to claim the GST components of the property costs.

    As true blue mentioned, its mainly used in commercial, but I dont see why it cant be used for residential.

    David Femia

    Femia Property Group
    Property Investment Consultants
    http://www.femiapropertygroup.com.au

    Profile photo of truebluetrueblue
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    @trueblue
    Join Date: 2003
    Post Count: 142
    June 24, 2003 - 7:36 am

    You’ve raised a very interesting point here, David. As I understand, a residential IP is input taxed ie no GST is charged by the landlord. Following on from your suggestion, can we then claim gst on repairs & new plant like airconditioning systems? If this is the case, it is definitely worth while registering for GST & getting an ABN.

    Profile photo of davidfemiadavidfemia
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    @davidfemia
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    Post Count: 89
    June 24, 2003 - 8:28 am

    Hi Trueblue,

    Your right, you cant charge the GST on residential rent.

    I am aware of a few that have decided to do so, and claim that its been a benefit to them.

    I will give the ATO a call tomorrow and do a little more research.

    David Femia

    Femia Property Group
    Property Investment Consultants
    http://www.femiapropertygroup.com.au

    Profile photo of truebluetrueblue
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    @trueblue
    Join Date: 2003
    Post Count: 142
    June 26, 2003 - 5:04 am

    I’ve checked with my accountant on this. Like you, David, he is aware of people who are claiming input credit through trusts when they shouldn’t.

    I cannot see why anyone would want to submit a quarterly BAS in this case. Seems like alot of work for nothing.

    Profile photo of ldp43.ldp43.
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    @ldp43.
    Join Date: 2003
    Post Count: 10
    June 26, 2003 - 1:16 pm

    To confirm

    If the income is input taxed then you cannot claim GST on the expenses incurred in earning that income.

    Residential rents are input taxed.

    It may be possible that someone is running a business from a residential property, and not residing there. (Did that myself a few years back). In this case rent could include GST and all expenses GST claimed back if the landlord is registered. (Again, income needs to be 50,000 + 5,000 GST before you are required to register, but you may choose to, etc etc.

    Always best to check with a professional though.

    Regards…

    Laurie

    Profile photo of jempirejempire
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    @jempire
    Join Date: 2001
    Post Count: 19
    July 4, 2003 - 3:09 pm

    So let me get this right.

    Because res income has no GST the GST on the purchases can not be claimed.

    So if you can not legally claim the GST on say your repairs than what is the piont of being registered for GST (when dealing with res properties).

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