When it comes to buying property in Australia, many buyers and investors are often confused about whether Goods and Services Tax (GST) applies to their purchase. In this article, I will provide a brief but essential overview of when GST is payable in property transactions.
When Does GST Apply?
The key consideration is whether the property transaction is classified as a GST taxable supply. Below are some common scenarios where GST is applicable.
- Purchasing a vacant block of land. In most cases, this type of transaction is considered a taxable supply, meaning GST is payable.
- Buying a brand-new property. When an investor buys a new apartment or house, GST is usually included in the purchase price or needs to be accounted for separately.
GST Considerations for Buyers
A crucial factor to check is whether the purchase price is GST-inclusive. If it is not explicitly stated as such, then GST may need to be paid on top of the agreed price. Always review the contract carefully and clarify this point before proceeding.
What About Commercial Properties?
For commercial properties, the key issue is whether the GST going concern exemption applies. If the transaction meets the requirements for a going concern, then no GST is payable. However, if the exemption does not apply, the buyer must factor in GST on top of the purchase price.
Final Thoughts
Understanding GST implications in property transactions is crucial for buyers and investors. Ensuring that GST is properly accounted for can prevent unexpected costs and legal issues. If you are unsure about your specific transaction, seeking legal advice can help ensure compliance and clarity.
For further guidance on property law and taxation, contact Ensure Legal today.
