Like most countries, you are supposed to pay Goods and Service Tax (GST) on sale of property in Australia as well. GST is levied on your property that may be a new residential accommodation.
A new residential property, as per the ATO, is a property that has not been sold previously as residential premises. It can also be a property that has been substantially renovated or re-built on a demolished property.
Since, buying and selling property is considered as a business by ATO, people in such a business are supposed to have an Australian Business Number (ABN) and be registered for GST and deposit GST applicable of sale of property.
Although GST is calculated on total value but for property, in place of total value, in most cases, the ATO allows investors to use the margin scheme as an alternative way of calculating the payable GST when you sell your investment property and hence offers substantial savings to you.
What is GST margin scheme?
Normally, payable GST is 10% of the value of the taxable supply of goods or services but on taxable supply where the GST margin scheme is applicable, the GST is calculated as 1/11th of the margin for the taxable supply.
As a matter of fact, GST margin is the difference between Consideration value i.e. sale price of the supply and original acquisition cost of the supply excluding other taxes, stamp duty or legal fees pain at the time of purchase.
For simple understanding, the sales margin is the difference between selling price and the amount you originally paid for the property.
The eligibility criteria for GST margin scheme
The eligibility criteria for availing margin scheme is based on the time when property was purchased and what GST was applied at the time of original acquisition.
This has a specific relevance as if the property was purchased before 1st July 2000, the property involved was not subject to GST application and hence you will be considered eligible f to apply the margin scheme while calculating the GST on sale of your property.
Also, for being eligible for the GST margin scheme both parties, seller and buyer, must have a written agreement before settlement. As per ATO, the settlement date is considered as the date of your purchase of property.
Role of property tax consultants
Although calculation of GST margin seems to be quite easy yet often people find eligibility for GST margin scheme puzzling or tricky.
Moreover, as a property investor, apart from the GST, you have serious consider many possible implications like stamp duty, land tax and income tax etc.
Especially, while dealing with regulatory and taxation requirements, it is always prudent to engage the best among professional property tax specialists or legal tax consultants. You may contact Mosaic Tax Legal for GST margin scheme property in Australia for most authentic and genuine guidance and arranging necessary documentation for you.
When you contact Mosaic Tax Legal for GST margin scheme property, you will be free from the stress of dealing with various taxes and regulatory requirement of the ATO as all necessary regulations and reporting obligations will be fulfilled by the company in a professional and legal way at a reasonable cost.