GST and property: Thorny Issues in Practice – a recorded online conference

Session 1: Premises Puzzle: Commercial Residential Premises and their GST Implications

The classification of premises as to whether they are residential or commercial residential, makes a considerable difference to the GST treatment for both sale and leasing arrangements. This session looks into how to determine if premises are commercial residential premises and the GST implications if they are, including:

• What is the definition of “commercial residential premises”?
• What are the tests that can be applied to assist with categorising whether a property is commercial residential property?
• The GST implications for a property classified as “commercial residential premises”
• How supplies of long-term accommodation are treated? (GSTR 2012/7)
• What is the GST treatment for:
  • rooms advertised as available for accommodation in a residential dwelling?
  • bed and breakfast accommodation?
• GST treatment for guaranteed rentals involving serviced apartments and strata units leased by an owner to a management operator
• The GST treatment for:
  • student accommodation
  • co-living arrangements
  • boarding houses
• Practical examples

Session 2: Isolated Property Transactions and the ‘Enterprise’ Dilemma

One of the intricacies of the GST legislation is that it uses the concept of “enterprise” as an activity that can determine whether GST registration is required. The difficulty is that an “enterprise” may not necessarily be a “business”. This session delves into how one off property projects fit into the GST classification, including:

• When the subdivision and sale of property doesn’t amount to the carrying on of a business, however may amount to an “enterprise”
• When can the subdivision of the family home amount to an “enterprise”?
• Does the “mere realisation of a capital asset” term used for income tax purposes, also have relevance as to whether GST applies on a sale
• At what point does the intention for a property’s use impact on the GST treatment?
• What are the “tipping points” that can turn an isolated property transaction into an “enterprise”? (MT 2006/1)
• When would the anticipated proceeds from a property sale be required to be included in the projected GST turnover calculations? (Ian Mark Collins & Mieneke Mianno Collins ATF The Collins Retirement Fund v FC of T [2022] AATA 628)
• A review of the GST aspects of the ATO’s “Tax consequences on sales of small-scale land subdivisions” (QC 71028)

Session 3: GST Calculation Challenges: Going Beyond the 10% Benchmark

To use an ATO fact sheet’s definition of GST as a “broad-based tax of 10% on most goods, services and other items sold or consumed in Australia”, you wouldn’t think a lot could go wrong with the calculation. However, it seems to be that when the calculation gets away from 10% that the issues surface. This session explores further, including:

• How use of the margin scheme is creating issues:
  • with the ATO
  • between vendor and purchaser
  • when historical information is required
• How to correctly deal with GST withholding at settlement when the margin scheme is used
• The issues encountered in practice when the use of the 0% rate is coming back to bite when using:
  • the GST-free going concern exemption
  • the GST-free farmland exemption
• How division 129 and 135 GST adjustments are getting overlooked
• How the sales of “mixed use” properties are creating GST issues
• Tips to avoid a purchaser expecting a tax invoice with 10% GST whilst the seller expects no GST or GST less than 10% of consideration
• How the drafting of contractual terms are impacting on GST issues with property
• The penalties and dispute remedies applying in practice when GST is going wrong with property transaction