When it comes to property development, having a good understanding of the Goods and Services Tax or GST is essential. If you’re not familiar with GST, its regulations mandate you to register in one if your annual turnover in the last 12 months or your expected yearly turnover in the next 12 months reaches or exceeds $75,000. Moreover, it is advisable to register voluntarily to be able to claim back the GST from the expenses accrued in your development project.
That said, it is essential to be mindful of the challenges of investing in property investment and the GST ramifications of this as a property developer.
Property Development and GST in a Nutshell
If you are developing residential or commercial property for resale purposes, the initial acquisition of the property would typically be a ‘creditable acquisition’, and you will then be eligible to claim the GST on the purchase under the condition that the property was sold as ’a taxable supply’ to you. I
In other words, if you purchase the property from a vendor who is not GST-registered or not eligible to be registered, there will be no taxable supply for the sale of the property. Thus, you will not be entitled to claim back any GST.
As a property developer, you are generally eligible to take back all the GST used in the expense of developing a property, provided that the property will be used solely to create taxable supplies in the future.
Take note that the GST will still be significant even though you failed to register since the tax applies once you become eligible to register for one. While this might come as a surprise for residential property owners who have never been involved in property development in the past, it’s never too late to make yourself familiar with its peaks and valleys.
If you want to become familiar with the process, Premier Professional Partners is the best place in South Carlton to seek assistance from. We are equipped with vast knowledge and seasoned experience that can help you gain a full understanding of the complexities attached to property development and GST.