GST on Sale of New Property in Trust not registered for GST

Hello

Could someone please help me work out what I should do on this?

I set up a new discretionary trust and purchased land and then egaged a builder to build a house for me. The trust isn't registered GST because I was going to keep the property. I am the trustee of the trust and it has no other assets.

My intention was to keep the property long term, it would be cashflow postive slightly. Now construction is nearly complete and I have run into some cashflow problems and need to sell. If I sell I will have approx $80,000 to $100,000 profit.

My questions are:

1. Do I need to charge GST?
2. If so, should I register for GST now?
3. Can I claim all GST paid so far during the construction if I wasn't registered?
4. Any tips?

Thanks in advance, and I have looked around for answers, particularly this thread http://www.somersoft.com/forums/showthread.php?t=31407
But it is very confusing for me, so would appreciate some help/
 
First off, you should get advice from your own accountant.
However, there is a potential to not have to charge GST if the sale of the property is a "mere realisation" of a capital asset. This comes down to your intention for the property originally. As you purchased the property to be a rental, are not registered for GST, but are having to sell for cash flow reasons, you may not have to pay GST. You would need to be able to prove that you intended the property to be a long term investment, and not to build and sell for a profit.
 
I am not qualified to advise .....................

But going through a similar thing and this is my take on it.
As you always intended to rent and keep the investment - I would say its GST exempt but I would be inclined to rent it for a few months to firm that position up.

Even so your trust is not in the business of making money on development - it was set up to invest right ? So again GST exempt.

If you reg for GST - yes you can claim all paid gst on the building but you have to pay gst on the whole cost of your sale - so if you sold it for 400 - 40 is to pay - could wipe out profit.

I forgot to say I have no idea how the trust will effect things or the interp of the ruling - it could go in your favour though because one would not set up a trust to build and sell

The thing is that there is no clear answer on this but from the Bantacs booklet I take it to mean that you intended to buy and build a domestic rental - to rent out = no GST to pay even though you have now realised your asset and need to sell.
 
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See your accountant.

Its hard enough to work out everything when intentions don't change. When they do, its messy. I've had to go through a few discussions with the tax office myself with some clients when they get audited on these issues and even they have problems with it.
 
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