GST & second hand goods provision
Question from wayne updated on 12th June 2020:
Our Trust is not GST registered and we are looking to charge our GST registered businesses rental for use of premises. Can the GST registered businesses claim GST tax traction of charged rentals? Like second hand goods provision?
Our expert Matthew Gilligan responded:
The short answer here is no. If the Trust is not GST registered, and therefore not charging GST on the rent for the use of the premises, then the business cannot claim GST. While you are right to note that there can be instances where a second-hand goods claim can be made if a good has been bought from a non-registered party, that is not applicable here.
One reason for that is that there is an associated persons prohibition on claiming GST under the second-hand goods provisions where the transaction occurs between associated parties.
You may wonder whether there is value in registering the trust for GST (assuming turnover is below $60,000 and that it is optional). There is not. You would then just have to return the same amount of GST that is claimed and likely suffer more significant downside in terms of the trust property then being drawn into the GST net.
Matthew heads GRA's specialist property and asset planning division. He helps clients create optimal tax structures and build wealth through property. He has an extensive buy-to-hold property portfolio, is currently involved in over a dozen developments, and is author of two books - Property 101 and Tax Structures 101.Search the Ask an Expert archive
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