The treatment of GST on property transactions can cause a raft of challenges for clients and advisers alike. In this four part webinar series, learn directly from the experts on how to best navigate these challenges. Sessions covered include the GST treatment of mixed supplies, when property transactions may or may not satisfy the enterprise criteria, as well as navigating GST clauses in property contracts. This webinar series also includes a session presented by the ATO on the key traps and pitfalls that can occur when dealing with GST in property transactions.

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Program 1: Am I Conducting an Enterprise? A Property Perspective

One of the elements required for GST to apply is that a supply is made in the “course or furtherance of an enterprise” that the entity carries on. This definition is not always straightforward in the property sphere. This session explores when property transactions may or may not satisfy the enterprise criteria, including:

• What are the factors that can tip a property sale from being the mere realization of a capital asset to an enterprise?
• How are one off property sales treated?
• How is a sale of vacant land zoned for residential usage treated?
• Property acquired for a planned development sold prior to development proceeding – is this an enterprise?
• When is the sale of subdivided farmland considered to be an enterprise?
• When is the leasing of a property considered to be an enterprise?
• Practical examples

Program 2: GST and Mixed Supplies: What Could Possibly Go Wrong?

Supplies for GST purposes can be taxable, GST-free, input taxed or other supplies not subject to GST. But what if the supply is a mixture of these? This session provides a practical look into the GST treatment of mixed supplies, as well as the traps and pitfalls, including:

• What are the reasonable methods of apportioning mixed supplies into taxable and non-taxable?
• Sale of farm with farm house:
  • apportion as a mixed supply?
  • can you use the GST free farmland option?
  • can you use the GST free going concern option?
• Situations where a GST adjustment under Division 135 is required
• What to do if a seller collects GST on the full amount of a mixed supply when they didn’t have to?
• Case studies and war stories

Program 3: Insights from the Regulator: GST and Property

With the ATO at the pointy end of reviewing the GST treatment of the position taken by practitioners in relation to property transactions, it is well placed to provide valuable insights into the challenging areas of GST, common errors, and the traps and pitfalls that can occur. In this session the ATO will share their experiences with us, including:

• Calculation, apportioning and documentation issues with the margin scheme
• A review of the fair and reasonable apportionment requirements for mixed supplies and the margin scheme
• GST withholding at settlement:
  • reporting issues with the BAS
  • vendors paying and putting the purchaser at risk
• GST free going concern provisions:
  • examples where used on commercial properties not meeting eligibility requirements
  • examples where the “all things necessary provision” is not being met
• ATO data matching of property transactions
• Commercial property outgoings and adhering to GSTD 2000/10
• The early support and education available

Program 4: GST Contract Clauses for Property: It Pays to Cover Yourself

The treatment of GST on property sales can involve complexities that include the margin scheme and GST free provisions. Disputes can arise in the event of underpaid GST, including who is liable, after the transaction has undergone a closer look from the ATO. This session looks at the drafting of the contract clauses that affect GST to assist in ensuring the transacting parties are fully informed of the potential GST outcomes and appropriately protected, including:

• The GST risks for:
  • the vendor
  • the purchaser
• Providing for Division 135 adjustments in sale agreements
• How agreements determine which party is liable for a GST underpayment when:
  • GST free going concern requirements are not met
  • GST free farmland requirements are not met
• When is it prudent to apply for a private binding ruling on the GST treatment of a property transaction prior to entering into an agreement?
• How much weight can be given to relying on the ATO’s property decision tool in determining GST liability?
• What do first time property developers need to be aware of in terms if GST risk and risk allocation?
• What are the elements of a good GST clause in a contract?
• War stories and practical examples

Ross Higgins, Partner, Mills Oakley, Melbourne

Jeff Pfaff, Partner, PwC, Indirect Taxes, Brisbane

Loretta Bishop-Spalding, Director, GST Real Property, ATO, Adelaide

Rhys Guild, Partner, MinterEllison, Sydney