Taxing Developments - API Article

In recent months I’ve had a number of conversations with clients who are building new residential properties, a couple intending to keep the property and rent it out and some intending to sell for a profit. When I informed these clients of the potential tax implications of selling, they were quite surprised that GST could apply and they wouldn’t necessarily be eligible for CGT discounts.

There has also been a couple of recent ATO cases where the tax office has determined property sales to be profit-making, rather than realisation of capital assets, so it’s important to have all your ducks in a row.

How the sale of the new property is treated for tax purposes all comes down to your original “intention” at the initial time of purchase (and the ability to prove this intention to the ATO). Proof of your intention may include items like email correspondence with your accountant and minutes of meetings. There are three possible categories and subsequent tax implications ...

Click on the link below to read more of this great article written for the Australian Property Investor Newsletter by Pat Mannix on June 18, 2015.

http://www.gatherumgoss.com/uploads/167/120/Taxing-Developments-16-June-2015.pdf