Hi all,
I have a query regarding CGT and being classified as a “Property Developer”. I recently sold my hospitality business, bought some land and built some units. I was active in coordinating/building the development and the plan now is to continue developing new residential/commercial as a career path. I operate under a Trust (which bought the land) and had set up a Company (which did the building work for the Trust).
I have now sold the units soon after they have been built, which I know I will have to pay GST (as well as being able to claim all the GST expense along the way).
My question is, what other tax will I be due for? More specifically, will I be required to pay full CGT, or am I exempt due to operating as a “Property Developer”. This has been the loose advice from a few accounting type friends, who believe if you primarily operate as a developer, then you do not pay CGT. I will pay, however, income tax, of which a Company is capped at 30%.
Can anyone clarify and shed any light here??
Thanks :)
JimBo
Email MeHi again,
Just hoping someone may have some thoughts on my query I posted back last week. It would be good to hear other peoples opinion.
Thanks :)
JimBo
Email MeThis has been the loose advice from a few accounting type friends, who believe if you primarily operate as a developer, then you do not pay CGT. I will pay, however, income tax, of which a Company is capped at 30%.
Hi JimBo,
That is how I believe it works too – but then, I am NOT an adviser of any sort, so this is truly just an opinion.Benny
Jimbo
Your trust bought the land.
When you built the units. Did the units end up back in underneath the trust?
they should of: as a discretionary trust could then give a payment to yourself as a individual. Which is wise to do up to 180k. (The point in which company tax becomes a better avenue for paying tax)
You could of missed out on tens of thousands of savings there.How long ago was the development.
Ps your sentences are confusing because you go from past tense, as in your completed it. Into future tense stating what you are going to do.
Sounds like you will be taxed on revenue account as you seem to be a developer rather than an investor. As the trust is the entity trusts are not taxed at all (if oncome distributed) but the recipient of the distribution will pay the tax.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks everyone, this has clarified things similar to what I was thinking. Developers don’t pay CGT, however, they pay income tax; and in this case the Company will pay the tax (capped at 30%).
JimBo
Email MeThanks everyone, this has clarified things similar to what I was thinking. Developers don’t pay CGT, however, they pay income tax; and in this case the Company will pay the tax (capped at 30%).
Above you say a trustee is owner. So company won’t be taxed but the trust will. Tax rate will depend on beneficiary
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You must be logged in to reply to this topic. If you don't have an account, you can register here.
