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From: GoMichael !
While chatting with my accountant today (as you do) he mentioned a quirk of the GST legislation to do with subdividing your own home and land.
Say you’ve lived in your home for 10 or 20 years and decide you don’t want that extra land on the side any more. So you subdivide and sell off the land. There’s no GST payable on the land sale, but the following two points now arise:
1. You are now the “developer” of a subdivision (your original large block of land).
2. Your house is now on a new title. So…it’s a NEW HOUSE!
The GST implication of 1 + 2 is that if you now sell the home you’ve lived in for decades, you’re a developer selling a new house – so you must collect and remit GST on the sale.
This is a consequence of how the legislation has been worded. I doubt that the ATO is going to be chasing after people who innocently find themselves in this situation as it surely isn’t the intent of the law. Unless of course they’re in the process of reaming out someone they’ve caught for evasion elsewhere. But it’s worth talking to your accountant.
Of course, you can just continue to hold on to your “new” house for another five years. After that, it will be “old” again and thus won’t attract GST. Simple, really :-s
While chatting with my accountant today (as you do) he mentioned a quirk of the GST legislation to do with subdividing your own home and land.
Say you’ve lived in your home for 10 or 20 years and decide you don’t want that extra land on the side any more. So you subdivide and sell off the land. There’s no GST payable on the land sale, but the following two points now arise:
1. You are now the “developer” of a subdivision (your original large block of land).
2. Your house is now on a new title. So…it’s a NEW HOUSE!
The GST implication of 1 + 2 is that if you now sell the home you’ve lived in for decades, you’re a developer selling a new house – so you must collect and remit GST on the sale.
This is a consequence of how the legislation has been worded. I doubt that the ATO is going to be chasing after people who innocently find themselves in this situation as it surely isn’t the intent of the law. Unless of course they’re in the process of reaming out someone they’ve caught for evasion elsewhere. But it’s worth talking to your accountant.
Of course, you can just continue to hold on to your “new” house for another five years. After that, it will be “old” again and thus won’t attract GST. Simple, really :-s
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