GST and Uncommercial Property Arrangements

The Tax Office has released two Alerts warning taxpayers that it is currently scrutinising GST and uncommercial property arrangements.

The two arrangements are:

• arrangements allowing a land owner to delay GST registration to minimise the GST payable under the margin scheme, but still claim a full input tax credit (ITC) on the acquisition of construction services from an associate; and
• arrangements in which an entity uses an associate to secure ITCs on the construction of residential premises for lease and defer the corresponding GST liability.

The Tax Office says that these arrangements could give rise to taxation issues, including an entity’s entitlement to ITCs and whether the anti-avoidance GST provisions would apply.