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Danielle19(Champion)Champion
20 Mar 2024

Hi dear,


My client bought a piece of land for $330K in 2021, and then built a house cost him $440K, and then he sold it for $1,100,000 immediately after completion. He used margin scheme. Could you confirm the followings:

  1. He needs to pay GST under margin scheme (1,100,000-330,000)/11=$70,000
  2. His business profit is $1,100,000-330,000-$440,000=$330,000
  3. He is entitled for GST credit $40K on the construction cost $440,000

Thank you


Danielle


336 views
3 replies
336 views
3 replies

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Taxduck(Taxicorn)Taxicorn
20 Mar 2024

Well, that's the margin scheme. Pay GST on the margin between the land which is bought GST free and the sale price.

https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/your-industry/property/gst-and-the-margin-scheme/calculating-the-gst-payable?anchor=CalculatingtheGSTpayable#CalculatingtheGSTpayable

You would need the tax invoices to claim GST on construction costs. (Some costs may be GST free)

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Most helpful reply

Taxduck(Taxicorn)Taxicorn
20 Mar 2024

Well, that's the margin scheme. Pay GST on the margin between the land which is bought GST free and the sale price.

https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/your-industry/property/gst-and-the-margin-scheme/calculating-the-gst-payable?anchor=CalculatingtheGSTpayable#CalculatingtheGSTpayable

You would need the tax invoices to claim GST on construction costs. (Some costs may be GST free)

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