GST Annexure - Perth Contracts

[MTR]

Hi everyone

Just wondering whether investors/developers in Perth are including this GST annexure when purchasing? Choice 3 - Margin Scheme.

I did not actually realise this was required and have not completed this, now trying to sort out via my settlement agent.

Don't want anyone else to make the same mistake, if audited by ATO they will want to view this, otherwise I believe will cost you 10% of the purchase price.

Cheers
MTR

 

[thatbum]

Weird coincidence - I just filled one out for the first time as a buyer this morning.

I believe it just has to be done by settlement, and is more of an issue for the seller?

 

[westminster]

I haven't done one before. Panic has just set in.

 

[westminster]

I've just grabbed a copy of the an Annexure and it looks like it's something the Seller imposes if they are GST registered and using one of the 4 types.

I don't think it's something a buyer needs but I will check with my accountant.

 

[MTR]

Your right, just spoke to settlement agent, my accountant doing my head in, definitely wires crossed here. Running around like a headless chook for no reason.

Just ignore, waiting to hear back from my accountant..... geeeez

 

[MTR]

I've just grabbed a copy of the an Annexure and it looks like it's something the Seller imposes if they are GST registered and using one of the 4 types.

I don't think it's something a buyer needs but I will check with my accountant.

Would be also grateful if you check with your accountant as well.

cheers

 

[MTR]

Just spoke to my accountant he confirms that I should have completed this and he is on hols at the moment but going to send me some stuff from ATO on this. Will see what he is on about soon I guess.

 

[MTR]

Just got this from accountant

Here we go

https://www.ato.gov.au/Print-publications/GST-and-the-margin-scheme/?anchor=deciding#deciding

 

[BLTN]

I thought this only applied if you sold property as part of a business?

If you just develop land or do the odd development, I wouldn't have thought that would constitute running a business.

I do recall reading about how if you have 20 properties and you spend heaps of your time managing them all, that would be considering running a business, but doing a single (or even a couple) of developments in your free time, I don't think that would be considered running a business.

Interested to hear what the accountants say though as I am looking at getting into developments as soon as I can find something decent.

 

[westminster]

Here we go

https://www.ato.gov.au/Print-publications/GST-and-the-margin-scheme/?anchor=deciding#deciding

Still seems to be a Sellers thing that you either use the Annexure or the words in the Subject To section saying that the sale is subject to the Margin Scheme.

I don't think this is for Buying a property that you intend to develop using the Margin Scheme

 

[rooky]

Here we go

https://www.ato.gov.au/Print-publications/GST-and-the-margin-scheme/?anchor=deciding#deciding

I am 100% sure, it's sellers thing. You have to worry about it when you sell units. Have a look at following.

https://www.ato.gov.au/Print-public...sing_the_margin_scheme_when_you_sell_property

It reduces your GST amount payable when you sell property. Without margin scheme, you will pay app. 10% of sale amount.

 

[rooky]

Just spoke to my accountant he confirms that I should have completed this and he is on hols at the moment but going to send me some stuff from ATO on this. Will see what he is on about soon I guess.

Either your accountant has not understood your scenario properly or you need to start getting second opinions about his advice. I would think he has not got entire situation in enough detail.

 

[rooky]

Using margin scheme is good for developers. Otherwise when you sale units, will have to pay 10% or so of entire sale proceed which will for most part time developers, take away half of the profits. If you use margin scheme, you will pay GST of 10% only on your profit margin and hence name margin scheme.

 

[MTR]

Everyone.......I mentioned exactly this to my accountant..... said its when you buy property to use for developing, a resi house etc.

t I am seriously confused. Don't tell me I need a new accountant, seriously just changed to this one.

I know his anal, but ......

 

[MTR]

Either your accountant has not understood your scenario properly or you need to start getting second opinions about his advice. I would think he has not got entire situation in enough detail.

He knows my situation, I have 3 developments on the go at the moment, asked him what his other developers are doing, he said they are using the annexure that I attached when buying their sites/property.

 

[rooky]

Hi MTR,

You are entering transaction 2 times. First when you purchase site and second when you sale units.

From whom you purchase site, determines whether yoy can use margin scheme when you sale completed units or not. Looks like you have purchased residential site. So I guess you will be eligible to use margin scheme.

GST, margin scheme and eligibility for CGT discount are very confusing even for accountants. I put questions regarding them to 3 different accounants and still not clear answer. This is area where you need accountant who has done lot of development related work for himself and for clients as well.

Have a look "how not to be a developer" booklet from Julia Hartman. Look for section for GST in there. You may get bit of clarity.

This is area where you need accountant who has done plenty of work related to development for himself and also for clients. If you find such accountant, let me know.

 

[MTR]

Thanks Rooky
That is very helpful, I will check that it out.
Its very confusing, my accountant is also a developer, I think I need to eyeball him, cos its just making sense to me at the moment.

Cheers
MTR

 

[rooky]

Thanks Rooky
That is very helpful, I will check that it out.
Its very confusing, my accountant is also a developer, I think I need to eyeball him, cos its just making sense to me at the moment.

Cheers
MTR

Hi MTR,

Did you get any feedback from your accountant ? Just curious to know as it will apply to me also at some point.

Rooky.

 

[Tano]

Im going to buy a dev site and my accountant recommended that i get a signed GST Annexure form when i put in my offer. Is this a seperate form that the RE agent will have with him do we simply write on the conditions of the contact "Subject to margin scheme"?

 

[MTR]

Im going to buy a dev site and my accountant recommended that i get a signed GST Annexure form when i put in my offer. Is this a seperate form that the RE agent will have with him do we simply write on the conditions of the contact "Subject to margin scheme"?

Yes, subject to margin scheme
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