SearchVendor's GST status
John asks:
(updated on Tuesday, September 16th 2014)
I'm buying a motel that has been used as a rental property without the usage being changed after purchase. Can I change the usage to short-term rentals and claim the GST back off the purchase price?
Our Experts Answer:
John, if the vendor is unregistered for GST and you intend using the property in a taxable activity of short term letting you will be able to seek a GST refund via the second hand good provisions. If however the vendor is registered and the property Is in their taxable activity the GST will be charged at zero rate under the new compulsory zero rating rules. Care is needed in this situation because an acquisition inclusive of GST but zero rated leaves you with no further claim. I can't emphasise enough the importance of gaining written confirmation of the vendors GST status before you start negotiating.
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