GST sale considerations

Question from heather updated on 25th October 2016:

Back in 2007, we bought a hotel apartment, GST included. We claimed the GST back at 12.5%. We have just sold the apartment in April 2016 to a non-registered GST buyer - again GST included.

Given that the GST is now 15%, how do we work out the GST payable ? Will the total sale amount be at 15% or will some still be at 12.5% ?

Our expert Mark Withers responded:

Despite being acquired when GST was at 12.5% the supply now will be subject to standard rated GST at 15%. If the purchaser had been GST registered and provided a warranty that the property would form part of their taxable activity and would not be their place of residence the sale would have met the criteria for compulsory zero rating. Sale to unregistered purchaser leaves you with the 15% output tax liability.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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