Working out GST on sub division

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phlang
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@phlang
Join Date: 2009
Post Count: 18
May 13, 2012 - 5:28 am
Hi Everyone,
Has anyone got a simple equation to calulate the GST component payable on a sub division, (2 allotments split into 6 allotments).
We purchsaed both allotments for $382K and am selling each for $85K (Total of $510K).
How would we calulate the GST ?
Appreciate your help.
Cheers
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 13, 2012 - 10:10 am
Sale price x 10%??
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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phlang
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@phlang
Join Date: 2009
Post Count: 18
May 13, 2012 - 9:09 pm
Thanks Terry, but I was looking for a more accurate explanation. I don't think $51K is correct.
I thought you would only pay GST on the cap between the purchase price and the sale price minus any GST credit components that we received from the development cost to sub divide.
Has anyone experienced this senerio.
Thx
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 13, 2012 - 10:32 pm
Actually I think it should be 1/11th of the sale price.
You will be able to claim GST on items purchased for the development though. Did you pay GST on the purchase?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
phlang
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@phlang
Join Date: 2009
Post Count: 18
May 13, 2012 - 11:47 pm
Terryw wrote:
Actually I think it should be 1/11th of the sale price.
You will be able to claim GST on items purchased for the development though. Did you pay GST on the purchase?
No I didn't pay GST on the purchase
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 13, 2012 - 11:53 pm
Well, at least you should be able to claim all the GST on the costs associated with the development. Is the entity registered for GST?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
phlang
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@phlang
Join Date: 2009
Post Count: 18
May 14, 2012 - 12:33 am
Yes (entity – partnership) is registered for GST.
So does that mean $46,359 has to be paid as GST ($510K – 1/11th) minus any GST credits we have??
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 14, 2012 - 12:36 am
That sounds about right
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Tracey B
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@tracey-b
Join Date: 2009
Post Count: 158
May 14, 2012 - 3:27 am
I think you might be trying to describe the margin scheme – if you are check out this thread https://www.propertyinvesting.com/forums/property-investing/help-needed/4335989
I'm not an accountant or solicitor but I think whether you can use it depends whether the margin scheme has been used during any previous sale process on your land.
My solicitor and accountant usually help me out with these sorts of questions so it might be worth running it by them – it's a fair chunk of your profit if it's not dealt with properly and the tax man comes chasing you for it.
Let us know how you go.
Cheers, Tracey
phlang
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@phlang
Join Date: 2009
Post Count: 18
May 14, 2012 - 4:53 am
Thanks for that Tracey, I believe the margin scheme has been put in place, but I will check it out with my accountant.
Cheers