Does the sale of dwelling attract GST?
Scenario:
I purchased a farm GST-free as it is a farming business on which there was also a residential dwelling. I then sold the dwelling, which will be moved roughly 30km away. Does the sale of the dwelling attract GST?
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 he acquires it in carrying on his enterprise. However, the person does 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.