My goodness, your finance broker told you to get GST registered because of that? Is the financier so clueless that they cannot comprehend that those types of income don't come into the GST equation?
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Hello Mry
Why on earth do you think it is the clueless mortgage broker who is suggesting that apapworth be registered for GST?
This is because the clueless mortgage broker is advising his/her customer of a recent change to requirements by one of the mortgage insurers.
Most of the lenders and insurers require 'proof' of two years self employment or business activities when an applicant is self certifying their stated income. No other proof is required, so when an applicant says 'I have been self employed for more than two years as evidenced by my current registration of an ABN which is more than two years old, and I earn $X per annum' the statement is taken as truthful.
However, there has been a recent change for that 'proof' to include registration for GST when the stated income is more than the Government threshold for registration ie $75,000.
Moreover, at least one lender is requiring that, at time of application, the GST registration is at least three months old.
Better a clueless mortgage broker who is able to advise the customer of current requirements than a clueless mortgage broker who does not mention this to the applicant, who then faces rejection of their application based on non-compliance.
The alternate course of action, and one which many applicants choose to take, is the simple self certified 'I have had the terms and conditions of the loan explained to me and I can afford it' statement, however the 'no stated income' applications are limited to 70%LVR or, as with most of the banks, 60%.
For many applicants this low level lend is not an option.
Anyway, it is no good complaining - better to be registered than not. I have come across a number of applicants who have had GST registration on and off over the years, depending on what they are doing at the time. It really is neither here nor there. Many people registered for GST from the beginning, as otherwise you are flagging to your own customer that your business does not earn the threshold trading income, which at $50,000 and now $75,000 would rather put your business activities at 'cottage industry' level.
Probably even the clueless mortgage broker is registered for GST!
Cheers
Kristine