Please confirm my understanding or advise on the following:
1. I have done a property development in a Trust that is registered for GST. A residential property was purchased, the block split & the existing house sold & a new house constructed on the split block. Summary below
Purchase A 25-2-14 561,500
Sale A 23-10-14 487,500
Sale B 9-12-15 663,000
GST 1/11 53,545
GST claims on purchases 40,485
Net GST Cost 13,061
Please confirm the above method is correct
When is the Trust liable to pay the GST or how long can it be extended if the method has been a quarterly BAS? Final expenses invoices only received this quarter.
2. Is the net GST cost an expense for the Trusts taxable profit ?
3. If the Trust wasn’t registered for GST, would that be preferable as the $13061 would be saved?, or does the turnover fall into compulsory to register for GST?
Your margin scheme calculation is way out. It considers both properties. The sale of the existing house will not be subject to GST so you will need a valuer to apportion the original purchase price so you can work out the margin scheme on the new house. Note the buyer has to agree in writing to the use of the margin scheme.
Re timing of GST payments. I assume you are reporting on a cash basis. The input credits are claimable in the BAS for the period when you pay the expense and the GST on the sale is payable in the BAS that is relevant to the quarter in which you received the money for the new house.
The trust is required to be registered for GST because its turnover of items subject to GST is greater than $75,000. By building the house for resale at a profit the house is considered to be part of the trading stock, turnover of the trust.
When you do your tax return all figures entered are after GST has been deducted. This means that the GST you pay on the sale is not actually tax deductible but the income you declare from the sale is reduced by that amount anyway so it has the same effect.
Note expenses of subdivision have to be split between the two blocks and the GST cannot be claimed on the portion that relates to the block with the established house on it.