Jcm
Welcome to the world of accounting cost apportionment. A special world where no two opinions will be identical !
The issue...
You have an asset which will be apportioned so that each unit shares a proportion of the land. It must be apportioned for a number of purposes:
* For determining profit on each unit its total costs must be determined. Costs will include share of land, direct construction costs and also apportioned construction costs (ie common areas or shared costs such as sewer connection etc) The ATO expects a reasonable allocation - I would consider land may be affected by a variety of factors such as area but there could be factors which further affect values such as a easement affecting two of the lots.
* GST perhaps...Some GST may be claimed if a unit is not sold but tenanted or "kept" you cant.
* For land titles purposes (ie rates, land tax etc)
* Buyers will want to know m2 area for valuation purposes especially if its OTP. A concept is not sufficient.
* You may have other motivators for altering the apportionment. For example the more costs you allocate to units being sold the lower their profit. If you keep one and it wont be sold perhaps this could alter your allocations BUT you cant just do it in a blatant manner or in an audit you could be subject to allegations of a scheme and penalties.
Dividing by 4 wont cut it. Way too inaccurate and send wrong msg to buyers. Imagine their position if they later learn their lot is 21% not 25% ? You could end up with a nasty legal stoush.
A surveyor has / should be involved in the new titles and will be able to accurately apportion the land area. Surveyor / valuer should be able to address this issue and ensure buyers and sellers are all happy. Typically in my experience they will assist and co-ordinate the subdivision of titles.
I came across this issue several times with clients. One I recall had an old large factory. Demolished half, rebuilt it with major extension. Subdivided all of it and kept one portion for own business, sold some & tenated some. Construction apportionment and land apportionment and GST apportionment, valuation apportionment etc was a nightmare. He had to keep ATO, OSR, Bank, Buyers and his own wallet happy. Message ?? Get some reliable providers who are experienced in this work activity and they will guide you and problems will be avoided.
