Are You A Property Developer?

The Taxation Office regards any tax payer who buys and sells property on a frequent basis, or on a large scale, as potentially a property developer. This may include someone who buys and sells a number of properties over a relatively short period of time, or someone who has bought and subdivided a large piece of land.

As a property developer, you are obliged to register for Goods and Services Tax (GST). You will be able to collect a refund of any GST you have paid as a result of a purchase, but you are also required to remit to the Taxation Office, any GST you have collected as a result of a sale.

Refunds and payments are generally done on a quarterly basis, by way of a BAS statement.

GST refunds and GST being paid, must occur within the next quarter from the transaction occurring. To calculate how much GST you have paid on an item, divide the total sale price by 11%. That is the amount payable to the Taxation Office.

Your GST liability may be reduced by the GST refunds that you are owed. To calculate your refund, or liability, add up all of the GST refunds that you are owed. Now add up all of your GST liabilities. The difference between the two amounts is either what you will receive as a refund, or what you need to pay to the Taxation Office.

A property developer cannot claim a tax deduction for the cost of the land, or property until a sale occurs. At that stage, the profit is included as additional income in your tax return, for which tax is then payable.

Holding costs such as interest, water and other incidental costs can be claimed as a tax deduction in year that they incurred. You do not have to wait until the asset is sold for these items.

Disclaimer: The above information has been provided as a general guide only. It is not intended to provide you with taxation advice. This is a complex area and we recommend that you seek your own taxation advice from a qualified taxation advisor;

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