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GST is easy .... right?

GST is easy... right?

As a registered BAS Agent that deals with GST every day, we often hear people say that GST is easy – just add 10%.

In fact it is so easy, that 19 years after it was introduced, changes and corrections are still being made, and even more concerning, business people are still getting in wrong.

So, let’s look at some of the “easy” parts of our GST system for a builder who decides to build a house. 

Purchasing land


Planning and building

Now what happens once he has finished building the house having claimed GT on the eligible expenses along the way?


If he decides to sell the house, he has to calculate how much GST is in the sale price. To start with he needs to go back and have a look at the GST treatment when he purchased the land. The way the land was purchased will determine if the sale price includes a straight 10%. If he purchased the land using the margin scheme, he can reduce the amount of GST in the sale price. If he claimed GST at the time he bought the land, then the sale prices includes a full 10%.

And so, even though not all his costs included GST while building, he now has to add GST to the full sale price.

But, what happens, if he changes his mind and now decides to keep the house and rent it out. Well…. he has to pay back all the GST he has claimed as GST on residential property is different to GST on a premise built to on sell. And now he can’t claim any GST on any running costs of the house.

I hope he has a good bookkeeper who can help him workout if he may a profit and made sure he has claimed GST correctly!

And this builder is a pretty normal example of what business owners have to face every day navigating our complicated GST system.

Wait until we start telling you how "easy" the food and medical industries … stay tuned

Contact us to discuss how we can tailor our services for you and make the change you’re looking for.

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