GST relates to the sale of commercial property
Scenario:
I need guidance in relation to the sale of commercial property sold as a going concern and its GST implications. As there is no GST on the sale of the property, what happens to other expenses such as commission and legal fees, which include GST? Can the GST on these items be claimed?
Explanation:
Firstly, the definition of “creditable purposes” is important (GST Act s 11-15), which means a person acquires a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. However, you do not acquire the thing for a creditable purpose to the extent that:
- The acquisition relates to making supplier that would be input taxed, or
- The acquisition is of a private or domestic nature.
The sale of the property is a GST-free supply, not an input-taxed supply. As such, input credits can be claimed in regard to the cost incurred related to the sale.