As we approach May 2024, it’s crucial to address potential GST pitfalls when selling property. Over the past decade, there have been instances where property sellers, unaware of GST implications, faced unexpected tax bills, especially those converting residential properties into holiday rentals or using them for business.
Thankfully, recent law clarifications provide relief. Registered persons can now elect certain assets outside their taxable activity, exempting them from GST on sale, provided input tax wasn’t claimed, and the goods weren’t primarily used for taxable supplies.
What if GST has already been claimed? Act now! A transitional rule (Section 91 of the GST Act) must be utilized before April 1, 2025. This rule applies to tangible assets, particularly properties.
To comply, taxpayers must return output tax equal to previously deducted input tax or the nominal GST amount if the property was acquired as a zero-rated supply. The election must be made to the Commissioner by April 1, 2025.
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