Development across 2 tax years / GST

[serendip]

Question 1:
Scenario is that the development will commence in one tax year - buy land, pre-dev costs, hopefully subdivision costs but the build would not be competed till mid way through the following financial year. Will probably hold 1, sell 1. Can someone explain how claiming costs would work in this scenario?

Question 2:
Same scenario as above - buy block build 2 houses, hold 1, sell 1. My understanding is that I would be liable for GST on the house which is sold, but is it GST on the full sell price or do input tax credits apply here?

 

[Paul@PFI]

1. It depends on whether you intend to hold or sell. Some costs may be deductible in Y1. Some costs may be a element of trading stock and deferred until time of sale, Some costs may have GST. Some GST may be claimed. some may be deferred until sold. Some costs may become a CGT cost base if its later retained.
2. Depends if GST is claimed or not claimed during the build
3. Depends if you use the margin scheme to sell and identify a tax saving from the margin scheme. Each $1 of GST saved = $1 of profit.

Q2 : Apportionment would be required.

Personal tax advice that covers all elements of tax should be obtained. The entity type may have little effect but many factors may be involved.