GST and isolated transactions –
Business Succession Update – Summer 2013
Your client has a shop in the suburbs and he is not registered for GST. The building purchase plus renovation costs amounted to approximately $250,000 and the sale price is $500,000. It is an isolated transaction and your client is not in the business of buying and selling property. Is your client liable to GST under the subsequent sale because it was done ‘in the course or furtherance of an enterprise’ quoting section 9-5 of the GST Act?
The answer is ‘Yes’ because the renovation and subsequent sale is considered to be an enterprise by the Commissioner in paragraph 46 of GST Ruling 2001/7 – an old ruling but one that still has plenty of bite.
The answer? Make sure your client is registered for GST even if you do not think he should be – that goes for clients too.