Anyone who owns or acquires property, or an interest in property, or who exercises a right or entitlement on property that may include resale, conversion of the land, changes to the land substratum or in whole, construct upon the land, seek approvals etc and then to sell any or all of the land may be wrapped up in the enterprise of being a "developer". Tax law doesn't use that word.
The real issue is one of enterprise regardless of what you do or what you call it. That's the word used in tax law. It determines whether you need an ABN....Google MT 2006/1. Its a very broad view that is worded to apply to all types of business. If you believe you may need an ABN then you have a GST issue also. And an income issue rather than a CGT issue. The simple key issue is if a profit making intention exists you may need a ABN. Whether its an isolated or recurring issue is no concern.
Personal tax advice may assist if you are unsure. Your INTENT is everything. The ATO have nailed many taxpayers by accessing council DA applications to demonstrate the taxpayer should have had an ABN.
One of the more serious issues I encounter from time to time is someone who has already sold a developed site. Even their own former PPOR housing site as a knockdown, rebuild and sell may be affected (or may not). The belatedly seek tax advice. I then walk them through the ABN issue. And the GST issue. Then they realise its too late to choose a cheaper GST outcome. They then realise that 1/11th of what the thought was profit is ripped away. And they are subject to full tax. Using an example of a $1m sale the outcome can mean $90K of GST.
Tax preplanning is critical
- Structure / ownership
- Tax outcomes - Income + GST
- Land tax
- Duties
- Sale contract tax advice.
Doesn't matter who you are, if you build on land and are thinking you may sell it soon or later then get tax advice before you start. Know the issues.
