If you change the use of a property, you may have to repay GST Credits previously claimed!
GST Refunds may need to be Reversed
Many property investors are unaware, however if you –
- Have claimed GST Credits on the construction and/or development of a property (because at the time your intention was to sell upon completion or otherwise use the property for a creditable purpose), and
- You subsequently changed your mind (voluntarily or otherwise) and used it for a non-creditable purposes (usually by renting out the finished product as a residential home), then
- You are required to repay the GST Credits claimed (over time)!
Adjustments to be Reported in the June Period
The repayment of the GST Credits is generally reported via Adjustments to your June Business Activity Statement (“BAS”).
The Australian Taxation Office (“ATO”) therefore recently released a news item on their website reminding Tax Agents, and their Clients, that they should prepare to report the necessary Adjustments and pay the additional tax when completing their June BASs (which will be due very soon).
If you think the requirement to report Adjustments could impact on you we recommend reviewing the ATO Ruling here, and that you contact our Office for assistance (as the calculations and obligations are complicated and can be quite onerous).