GST property
- Thread starter andreww
- Start date
If you're not registered for gst or the property is not sold as a going concern (& a few other requirements ) then it doesn't matter whether the purchaser is an individual or a different entity, it will pay gst.
Dude get advice from an accountant and solicitor before signing anything.
Um - if you're not registered for GST then the property must be sold as is, an unaltered state from the current business state, and as a going concern.
My understanding is, as a going concern, the purchase needs to be operated in the same manner, and for the same purpose as prior to purchase for a minimum of two years. That doesn't means, if it's vacant, it has to stay vacant - but means you can't alter it ie, from a commercial workshop to a residence.
We've had to deal with this twice over the last 3 years - with the farm because the seller was GST registered and we're not ... we had to commit to keeping the vineyard fully operational for the minimum of 2 years to avoid GST.
With the tourist cottages - the seller was GST registered - and because we were separating the purchase by buying the physical property under one structure, and the operating business side in another structure - and because the vendors were subdividing off 10 acres from the back of the property - and because "going concern" is a very grey area that we didn't want to test in court - we determined, through conversations with several specialists, that because of the two structures and the subdivision we weren't buying it as an "as is" going concern and paid GST (which we claimed back almost immediately) - then deregistered the "physical property" structure as there will be no further income in it.
Get advice ... TerryW will give you the contacts if needed
First a company has ZERO to do with GST. GST applies equally to ordinary people.
Commercial property WILL likely have GST included in the total price. That's imposed on the seller. The issues is how you deal with that matter. If the seller and buyer contract and the going concern basis operates the GST is effectively disregarded both the buyer and seller. The main catch is that the buyer must also be registered for GST. The GC basis operates for a reason...Few if any lenders will lend the GST. Since the GST would be claimed back its a unfunded cashflow problem. The GC basis just keeps it simple.
There are many instances where you SHOULD register for GST. I will use an example. You buy a commercial prop and intend to rebuild it as housing. When you sell GST would be payable. So it makes sense to register and claim the GST on the acquisition and the build. The going concern basis may or may not be available.
Personal tax advice is a must. To consider the strategies and the issues. I have seen many property deals fall apart because the buyer didn't think of the GST.
