Financial Services

Properties

The University is involved in the rental of both commercial and domestic properties.

Outputs subject to GST in regard to properties include:

  • income from commercial rent
  • sales of new residential premises
  • sales of commercial residential premises
  • sales of commercial premises.

Input-taxed outputs include:

  • income from residential rent
  • sales of residential premises (not new, not commercial).

The receipt of property as a donation/gift is out of the scope of GST.

Inputs that are subject to GST include:

  • the purchase of commercial properties
  • the purchase of new residential properties
  • costs associated with earning income from properties such as management fees and electricity.

Those input tax credits that are incurred in providing input-taxed supplies cannot be claimed.

Inputs that do not include a GST component include:

  • rates
  • water sewerage and drainage.

Bonds received and repaid (refundable bonds) are not subject to GST. However the applicability of GST to the retention of a bond is dependent on the service connected to the bond.

For example, the retention of a bond to pay for damaged property is subject to GST, while the retention of a bond for unpaid residential rent is not subject to GST.

Margin scheme

If a taxable supply of real property is made by:

  • selling a freehold interest in land
  • selling a stratum title
  • granting or selling a long-term lease

then you may choose to apply the margin scheme in working out the amount of GST payable on the supply.

The GST payable is 1/11th of the margin for the supply.

If the real property was held at 1 July 2000, the margin is the difference between the GST-inclusive sale price (consideration) and the value of the supply as at 1 July 2000. If the real property is acquired on or after 1 July 2000 then the margin is the difference between the consideration for the supply and the consideration for the acquisition.

The margin scheme is more appropriate if the person acquiring the real property is not registered for GST purposes, or is not entitled to claim a full input tax credit.

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