Gst in CIP, pay from personal or business entity

Discussion in 'Commercial Property' started by flosed, 28th Apr, 2015.

  1. flosed

    flosed Member

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    Is Gst a must in CIP? Do I have to pay it if purchasing personally? What's ur opinion to buy CIP by compamy?

    Thanks.
     
  2. Scott No Mates

    Scott No Mates ...and people wonder why?

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    Yes, no and maybe.

    If you are buying a going concern being registered can save you 10% compared to not registered.
    If you're registered you offset the gst collected against gst paid.

    You can't pass on gst if unregistered (makes your rent look higher compared to comparable premises).

    Depending upon the value of the property & rent value you need to bite the bullet.
     
  3. flosed

    flosed Member

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    Thank you. Forgot to mention.

    I have a Gst registered company used for my contractor job. Sound like buying cip using Gst registered company is better than using personal entity.
     
  4. Terry_w

    Terry_w Member

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    Think further beyond GST. Who owns the shares in the company, what are the asset protection consequences. What about land tax? Income tax? CGT? etc
     
  5. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    The buyer needs to be registered for GST to claim the GST paid....You may need to seek tax advice BEFORE you settle. This will consider if you should register. Why you might and merits of ownership. A company might mean you pay lots more CGT later.

    First issue is what is annual rent ? If its $75K+ then GST is a MUST. It may still be wise to register since tenants expect to pay GST on rent and can claim it back in many cases.

    One catch to CIP is banks wont lend the GST :) - When they say 60% LVR they mean value ex-GST. And the claiming back from ATO can be onerous and take up to 6 weeks to come through (its an audit check since the refund is large). All tax advisers know the catches and make sure the first BAS is supported by correct documents.

    Worth checking contract for the terms of GST....Sometimes you cant claim it back too !!
     
  6. Scott No Mates

    Scott No Mates ...and people wonder why?

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    In which instances Paul? Can't say that I have dealt with that one.
     
  7. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    Going concern sales. VERY common in business property sale contracts. Its where the buyer and the seller agree (in the contract) that the sale will not include GST. So there is zip to claim.

    I have had many people dumbfounded when they think they can claim 1/11th to learn the sale didn't include any GST. Changes their cashflow.

    It usually people who didn't invest in a solicitor. Going concern sales can be terrific to avoid funding the GST but needs to be understood also. Saves on duty !

    Then there is the common margin scheme. Whilst it saves the developer the buyer CANNOT claim any GST even if its in the contract. https://www.ato.gov.au/General/Prop...ss/Selling-commercial-premises/Margin-scheme/
    (Typically the MS applies to new commercial devs. Not existing). The MS saves $ for resi and doesn't affect the buyer since they cant claim it. In commercial its specifically prohibited for the buyer to claim it. Its a standard ATO check for all GST refund claims on property acquisitions.