An issue that comes up on a regular basis is the treatment of GST in property contracts.

Essentially, unless you are dealing with second hand residential property then you need to consider GST.

This means that GST may be payable for brand new residential property, vacant land and commercial/industrial land.

These are the points that generally need to be considered:

1. Am I dealing with second hand residential property? If the answer is yes then there will be no GST payable. If the answer is no then move to question 2.
2. Am I dealing with brand new residential property, vacant land or commercial/industrial property? If the answer is yes then GST may be payable and move to question 3.
3. Is the seller registered for GST or is required to be registered for GST? If the answer is yes and the answer to question 2 is yes then GST will be payable. If the answer to question 3 is no then there will be no GST payable.
4. If GST is payable then consideration needs to be given to the following questions:
   (a)   Is the purchase price exclusive of GST; or
   (b)   Is the purchase price inclusive of GST?
5. The next question to consider is whether there are any exemptions or reduced amounts of GST that may be payable. The main categories are:
   (a)   Margin scheme
   (b)   Going concern
   (c)   Farmland exemption
   (d)   Fully taxed (currently 10%).

The above information is general only and each matter needs to be considered on its own merits with the input of an accountant as necessary.

This article does not deal with GST withholding which will be dealt with in a separate article.

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This update is for your information and interest only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.