Do you actually know what you are doing with GST? Are you avoiding issues with Property Transactions – What happens around GST? Whether there is GST or not on property transactions gives rise to a lot of confusion. The implications if you do get it wrong can cause serious ramifications for both parties to the agreement - think 15% of the purchase price. We are talking hundreds of thousands if not millions of dollars. The standard ADLS/REINZ Sale and Purchase Agreement for Real Estate in New Zealand (currently ninth edition 2012 (7)) has highlighted the need to ask questions around GST. The agreement does make things slightly easier as long as the form is filled in correctly. We have put together this basic overview as a starting point. Let’s set out the basics firstly from the Vendors Point of View. To be able to register for GST the vendor is not using the land for their principal place of residence and instead is using the land for making “taxable supplies”.
1
Examples could be: Taxable Supply for GST purposes
Long Term residential letting
NO
Short term letting where you receive a rate per night. For example - Airbnb
YES
Commercial Lease of a building
YES
Farming (but there are exceptions)
YES
Its not as straight forward as it looks – if you get it wrong think 15% of the purchase price.