Registering for goods and services tax, or GST, is a vital part of commercial property investment. GST is often overlooked, which is an all-too-common mistake that amateur investors make. Factoring GST in your budget will save you a lot of effort and resources.
While GST is a complicated topic and its intricate details can be difficult to comprehend, you can understand it with a little bit of help and research. To keep yourself updated about GST credit opportunities and avoid missing your GST payment dues, read on to learn more.
GST in a Nutshell
Goods and services tax is a tax applicable to certain types of properties if the seller is required to register for GST. Whether or not you are liable to pay it depends on some circumstances and conditions. There are also some conditions that will dictate how the tax will be calculated and whether or not you can claim back GST when buying a property.
The following can legally be considered as “property”:
- Land or land and buildings
- Licence to occupy the land, rights over land, or an interest in land
Are there any dangers attached to GST?
Unfortunately, most investors make one fatal mistake: failing to register for GST upon requirement. Failure to do so results in paying for GST for every sale you’ve made prior to being asked to register, even if GST isn’t included in the sale price.
A property worth $7,000,000 with no GST, for instance, will prompt you to pay for the GST costs, especially since it was intended to be registered. The costs will likely be coming out of your own pocket since the final sale only pertains to the property, without the GST costs.
If you have registered for the GST, however, the property would have solved for an additional of $100,000, making it a GST-inclusive price of $7,100,000. This is because buyers pay for the GST upfront, but have all the means to claim it back. You’re then able to pay the GST liability of $100,000, all without hurting the total profit.
If you fail to register, it means you lose a hefty amount of money, making GST registration extremely important in the real estate business.
Need More Help Understanding the Intricacies of GST?
GST can be challenging to deal with. Experts press that constant vigilance must be observed, especially when it comes to commercial property transactions. Unfortunately, GST issues are common—they come in various forms, and as a realtor, one must always be on the constant lookout for potential dangers.
There are also issues surrounding co-ownership and joint ventures, which can result in GST problems being difficult to resolve or contend with. While the application of the GST scheme may prove to be beneficial in other ways, its complexity continues to fuel problems in many aspects of the real estate industry.
Due to the hefty amounts involved, sellers and realtors are always encouraged to seek GST advice on real estate transactions. While the solution to the problems may seem straightforward enough, GST is a landscape that needs to be intricately understood. In uncharted territory, it’s always best to seek the help of the experts!
If you’re on the hunt for a legal firm in Milton, GLG Legal offers the best lawyers for your case. We understand the intricacies of commercial and property legalities, and we come up with innovative solutions for your needs. You’re our number one priority. For consultations, don’t hesitate to reach out to our team of talented lawyers.