27 Jan 11 Government to clarify GST rules around residential property
In media release No 2011/020, issued 27 January 2011, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, announced the release of a discussion paper on the design of proposed amendments to the GST law that aim to ensure that the law achieves the intended policy outcome for the GST treatment of residential premises.
This follows the Full Federal Court decision in FCT v Gloxinia Investments (Trustee)  FCAFC 46, which held that sales, by developers, of newly constructed residential premises that had been subject to development lease arrangements, were input taxed when sold to home buyers and investors.
The Assistant Treasurer said that the amendments will ensure that new residential premises constructed under development lease arrangements since 3 October 2007 are treated as taxable supplies, rather than input taxed supplies, where the premises are sold by developers to home buyers or investors. This amendment will contain a transitional provision to ensure that taxpayers who have entered into arrangements on a basis consistent with the Court's findings, prior to this announcement over newly constructed residential premises, are not disadvantaged.
From 1 July 2000, the amendments will ensure that the granting of individual strata lot leases over newly constructed residential premises is not sufficient by itself to make future supplies of the premises input taxed. Therefore, the subsequent sale of the newly constructed strata-titled premises will be taxable supplies of new residential premises.
Also from 1 July 2000, any change in property title arrangements, such as the subdivision of surrounding land or registration of a strata plan title over existing residential premises, will not result in the premises once again becoming new residential premises and being subject to GST if they are subsequently sold.
The closing date for submissions is 25 February 2011.