Strata Office purchase, GST questions

Hi All

My wife and I are buying a strata titled office which settles in 2 weeks. We are buying it in our own names and leasing it to my business which is a company. We will of course, lease it at market rates to keep everything at arms length.

The office is brand new and the purchase price is $202,000 + GST ($20,200).

I had not considered the GST implications previously and now am in a bit of a panic to find out where I stand.

I've been told that if my wife and I register an ABN as a partnership and register for GST, we can claim the $20,200 on the first Business Activity Statement after settlement.

We don't want to do anything complex like set up a trust in which to purchase and are happy with 50/50 fixed split of income (as per the land title which I think the ATO usually goes on).

So what happens if we do the above?
If I understand correctly we will:
* Have to charge GST on the lease (no problem)
* Be able to claim GST on all purchases/maintenance/costs related to the office that my wife and I spend.
* Have to submit quarterly BAS.
* Have to submit annual income tax returns for the partnership.

Will it affect the 50% CGT exemption?

Is there anything that stops you from just deregistering for GST after the first BAS?

I'm getting some advice this week but I'm running pretty short of time and want to make sure I'm heading in the right direction.


Thanks
Adam
 
One more question...

If we do go down the family trust route...

Who owns the property? I assume the trust is the entity on the title certificate?

Does it matter if the borrowers are myself and my wife (the trustees).. note that the property will not be taken as security by the bank. Should they/would they care that the owner will be the trust?
 
Re: your GST questions:

No, it won't affect the CGT discount.
The ATO may not like the fact that you de-register after one BAS. But if the rent is less then $75,000 per year, you do not have to register for GST. I would not advise de-registering after receiving the refund for the purchase, just from the 'smell test' perspective.

Also, if your business is registered for GST, you can claim the GST on the rent paid, so one entity (the company) claims the refund, and the other (the partnership) pays the GST to the ATO, so you won't be out of pocket.
 
I also would not de-register immediately after recouping the GST. Give it a while to fly under the ATO's radar.

Isn't it a little late to set up your trust now with (only two weeks till) settlement looming?

Even assuming you've signed up as yourselves "and/or nominee" you should seek legal advice relevant to NT to avoid double stamp duty (if relevant) and the haste with which you wish this trust set up. In VIC for example the entity has to exist (or at least be on the way to being established) to sign and/or nominee and avoid double stamp duty.

Seek advice from your solicitor.
 
You can register for GST to claim back the GST paid on acquisition and then you will charge GST on the rent going forward however if you deregister for GST within the periods mentioned in Division 129 then you will need to pay back the GST you claimed. Forget about 'smell test' or 'flying under the radar' consider the law.

Can't see why you would want to deregister when you and your wife will pay GST and the company will claim back the input tax credits putting you in a neutral position. It will however mean BAS returns for the partnership.

Seek good accounting advice before making any decisions.
 
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