澳洲Income or capital gain?

在澳大利亚税务



想买一个旧房子，推掉建3个townhouse, 请问赚的钱是income还是capital gain,争取两年半时间。

评论
如果一定是income, 如何做才能合理的避税？谢谢。

评论
感兴趣， 帮顶一下。 是否应转到财务专栏。

评论
就这一次应该算capital性质，如果以这维生，就算生意了。

评论
depends people initial intention

if you live there for a few years, then subdivide maybe capital gain

if you buy and subdivide directly into three units, might be business

Then margin scheme need consider for gst purpose

and structure for income split

But all can be argubly.....I am not saying I am 100% right..


评论
支持楼上的！

评论
capital gain

评论

你的问题很难回答，因为一直以来税法里关于是income还是capital receipt就没有一个定论。

有的只是一些case law和general guidelines做参考。


It depends on the facts of the case！


但是我非常同意楼上一位同学的关于intention的见解!

Intention狠重要，而且你的intention会改变的，self assess吧，不行的话，write in and ask ATO for a private ruling!

评论

Pretty much right.

You need to look at the commercial characteristics. If your intention is to build and sale to make a profit even once off projects can be classified as business and therefore the income is on revenue account. Once it is on revenue account it is not eligible for the CGT 50% discount.

Another thing to consider is GST.
If you build and sale you are entitled to claim ITC on your spendings but you have to pay GST on the sale.
If you build and rent out, you are not entitled to claim ITC because the rental income would be input taxed (assuming the properties are residential).
If intention has changed after the properties are  built you need to make adjustments to the BAS to reflect your GST position.

评论
S/B income as your initial intention is make profit from it.

评论

Thanks for your advice, what is the marginal scheme? sorry I'm just 菜鸟。

评论

Chris is a builder who purchased a vacant block of land from a person that was not registered for GST in July 2009 for $245,000. He builds a house incurring $280,000 in building costs and sells it for $600,000. Chris's margin will be:

selling price less purchase price equals margin

$600,000 − $245,000 = $355,000

The GST payable on the sale will be:


$355,000
11
=
$32,273


Chris will also be able to claim GST credits on any of the building costs where GST was charged.



评论

Thanks for that.  Very sorry 我没办法给分。 the issue you raised is deemed that it has been treated as commercial, then I need lodge BAS for selling the units as well treat profit as income?

If I sell one property at each financial year (rent the left one out as rental property), can I avoid any commercial purpose then deem as capital gain? no one is wish to pay GST & treat the profit as income, so how can we get away from it?

Much appreciated

评论

totally agree with you!!  but most of people has got intention to make profit, so how can we persuade ATO to believe it's capital not income? if we have to rent it out for certain period, then how long should be.  profit to be treated as income is really hurt!!  also has got GST involved.  too complicate & end up profit will be much less after tax.

评论

you need to rent out the property for 5 years. then, when you sell, it will not subject to GST.

if that's the case, you will not be entitled to ITC on building cost.

within the 5 years period, if you are still actively advertise for selling, then you still liable for for GST, pro-rata ed.

评论

I would think the townhouse are usually for residential purpose, which should be GST-free.
If this scheme is carried by a non-GST registered entity, I don't see any potential GST implication.

In relation to the intention, I would say all investment are under a common intention to make a profit. The mere intention of profit making alone is NOT sufficient to constitute the nature of a revenue account item (or a business like activity). Generally, if you are in real estate and/or construction business, this would be in your revenue account. If this is just once-off investment plan, I have a gut feeling is that it is more likely than not to be capital nature. Again, this is controversial, more cases and more facts are required for a detailed conclusion.

评论

interesting answer, of course it's one off project, otherwise will setup a trust to do this sort of project as it's got 50% off regardless.  for a individual, it's really hassle to register GST without setup a company/trust. especially once off.  so has anyone has experience this & wish to make common?

评论

Based on the additional information just provided,
- the scheme is carried by an individual, who is not in property developing business.
- the individual is not GST registered entity
- this investment is one-off plan.

All of the above facts seem to add more weight on capital nature and no GST implication.

评论


this is subject to Chris is a GST registered entity and the sale of the property is a taxable supply per GST Act. What if he is just an ordinary bloke, no GST registered, which seems to me it is the case here. :) or the sale is not a taxable supply?

Question:

Have we established
- is this supply relating an enterprise the taxpayer is carrying on?
- is the taxpayer GST registered or required to be registered by law?
- Is the supply a GST-free supply or input taxed?

Without considering all the above facts, One might not be best to consider margin scheme implication. (just purely for saving some brain cells' sake) :)

评论

难道一套房子卖不到7万5？

评论

还有，是楼主问我什么是MARGIN SCHEME。我就找个例子而已。我没有说一定就是他所说的CASE



评论

Yes, I know my friend. I am not saying you are wrong, just pointing out things to consider before applying margin scheme or thinking about GST implication. I would normally do as you do, considering margin scheme implication, once establish all the facts mentioned above.

评论

The property type is actually irrelevant.

Even one-off transaction can be treated as a "business" and reqire to  register for GST.

ATO's view is if you buy property with the intention to sell or develop property to sell, of course at a profit, the transaction is more likely to be considered as a "business". Even it's one-off.

However, if you are constructing and selling your own home, it's private in nature. So, no GST implication.



评论

how about just build two townhouses, will that be easily avoid "business related transaction"? I've got friend who has got investment one house property rented for 3 years & re-build 2 brand new one on that land.  there is no GST applied at all & profit has been treated as capital gain.  so the number of property does matter, right?

评论


Again, the property type is not relevant. It doesn't matter if you are building a duplex, or a block of units.

You need to look at the facts.

When you are looking at the GST implication, it doesn't matter if it's an existing rental property you have owned for a number of years, or a new block of land you recently purchased. (I guess it will make a difference in the calculation, re margin scheme and etc)

If you are considered to be a "business" (or I think the correct term should be "enterprise") for GST purpose, then you will have to pay GST on the sell. Of course, even if it's a one-off transaction.

Beware, the definition of "enterprise" for GST purpose is different. An entity does not need to be carrying on a "business" in order to be carrying on an enterprise for GST purposes.



评论
understand, it's more likely to be treated as "revenue" rather than "capital gain".  so if I'm going to setup trust & use company as trustee, doesn't it mean the result/outcome could be another way around? or can I say trust has got 50% discount if you're holding new townhouse for more than one year.  if it's correct, then setup a trust is the best way to have this sort of practice?

评论


Before you make a decision, here is something might be helpful.

after reading the below article, you can then decided:
- whether your activity constitutes the definition of "enterprise".
- is the sale of residential townhouse a taxable supply?


The below article is written by Barrister CHRIS SIEVERS, AICKIN CHAMBERS

INTRODUCTION
If you trawl through the ATO’s register of Private Rulings[1], you will see that a number of them involve the question of whether the applicant is carrying on an “enterprise” for the purposes of the GST Act[2] when they are looking to subdivide and to sell real property.  The issue may be as simple as the subdivision of the family home into two lots, so that the vacant lot can be sold, ranging to a large-scale subdivision of land.
What a review of the register shows is that the views of the Commissioner do appear to be somewhat inconsistent and arbitrary.  This is probably a reflection on the nature of the material provided by taxpayers in support of the private ruling but also shows the difficulty in establishing where the line between the non-taxable activity of simply selling land in a profitable way ends, and conducting an “enterprise” begins.  Also, it is likely that within the ATO itself, officers have different views on where to draw this line.  Unfortunately, that makes life very difficult for practitioners who are asked to give advice in this problematic area.
This paper will look at the following matters:

(a)   The relevant provisions of the GST Act, with a focus on the concepts of “enterprise” and “registration”;

(b)  The Commissioner’s public Rulings on the concept of “carrying on an enterprise”; and

(c)   A consideration of some of the recent ATO private rulings dealing with the question of whether an entity is carrying on an enterprise when it undertakes the subdivision and sale of property.

This paper does not consider the cases handed down on the issue of “enterprise”[3] and seeks to focus more on how the ATO looks at the issue and applies its views in the making of private rulings.  That does not mean that the ATO’s views should be seen to be correct (they are often proved wrong), but this does provide an insight into how the ATO may look at a particular arrangement.

THE LEGISLATION

Taxable supply

GST is charged on “taxable supplies”, which are defined in s 9-5 of the GST Act.  The elements of taxable supply are:

(a)   You make the supply for consideration; and

(b)  The supply is made in the course or furtherance of an enterprise that you carry on; and

(c)   The supply is connected with Australia; and

(d)  You are registered or required to be registered.

In the context of the subdivision and sale of real property, (a) will be satisfied as the sale is for consideration, and (c) will be satisfied as the supply of real property located in Australia will always be connected with Australia: s 9-25(4). The relevant questions are therefore whether (b) and (d) are satisfied.  Each of which is considered below.
Of course, it should be noted that there will not be a taxable supply if the supply is input taxed or GST-free.  Those concepts are particular important for real property, given the input taxed treatment of the sale of existing residential premises[4] and the lease of residential premises[5], and the GST-free treatment of supplies such as the sale of a going concern[6] and the supply of farmland[7].

....

Enterprise

Section 195-1 relevantly states that:

(a)   “carrying on an *enterprise includes doing anything in the course of the commencement or termination of the enterprise.”

(b)  “enterprise has the meaning given by section 9-20”.

Section 9-20 relevantly provides that:

(1)  An enterprise is an activity, or series of activities, done:

(a)  In the form of a *business;

(b) In the form of an adventure or concern in the nature of trade; or

(c)   On a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property;

(2)  However, enterprise does not include an activity, or series of activities, done:

(a)  …

(b)  as a private recreational pursuit or hobby; or

(c)   by an individual (other than a trustee of a charitable fund) or a *partnership (all or most of which are individuals), without a reasonable expectation of profit or gain…

When regard is had to the above provisions, the following conclusions may be drawn:

(a)   The definition of “enterprise” in the GST Act is very wide, and it appears to be broader than “business”.  This is because an “enterprise” includes activities done “in the form of” a business and activities done “in the form of” an adventure or concern in the nature of trade. In this regard, the focus would appear to be less on the substance of the activities but on the form in which the activities are carried on.

(b) An enterprise includes “an activity” – therefore it will extend to a single activity (as well as a series of activities).  “One-off” transactions may therefore fall within the definition of “enterprise”.

(c)   The exclusion in s 9-20(2) extends to individuals and partners, but not to corporations.  Therefore, it would appear that where corporations carry on activities in the form of a business, or an adventure or concern in the nature of trade, those corporations carry on an enterprise regardless of whether they have a reasonable expectation of profit or gain.

The breadth of “enterprise” is shown by the Explanatory Memorandum to the Bill introducing the GST Act[8], which states as follows:

Enterprise is defined widely because the GST is intended to have a broad base.  Certain things are included as enterprises so that input tax credits are available to them.  Enterprise includes:

A business, trade or profession;
A lease, licence or other grant of interest in property;
Certain activities of gift deductible funds, authorities or institution;
Certain activities of charitable institutions;
Certain activities of religious institutions; and
Certain activities of governments and government corporations.
Certain things are excluded from being an enterprise.  For example, hobbies, private recreational pursuits and employee wages are not subject to GST.  For individuals and partnerships there must also be a reasonable expectation of profit or gain.

A broad approach to the concept of “enterprise” is also supported by the following aspects of the GST Act:

(a)   Unlike income tax, where deductions are limited to items on revenue account, and capital expenses may be depreciated over time, a registered enterprise is entitled to claim up-front input tax credits[9] on all expenses (regardless of whether those items may be regarded as being on “income” or “capital” account).

(b)  Entities carrying on an enterprise must register for GST if their annual turnover is above the threshold.  However, entities with an annual turnover below that threshold can elect to register for GST.  This will entitle small-scale enterprises (including ones which may not strictly be regarded as a business, but are carried out in in that way) the opportunity to claim input tax credits (but of course expose them to a GST liability on taxable outputs).


reference: http://chrissievers.wordpress.co ... e-of-real-property/


评论


You can still treat the transaction on "capital account". But, wheather you need to pay GST or not is a different subject.

If you have an old house (rental property) for a few years, and you demolish and re build a new one/two townhouses, you are more likely to treat it as "capital gain". But it doesn't stop you paying GST.

In the same scenario, if it's your family home, it probably will be a different tax position all together.

When it comes to income tax, you need to look at intention more closely.

I agree with the above post by 3IX37, there's bit of inconsistency in ATO's view. But, the principle stands.

I guess the last resort is for you to apply a private ruling if you know exactly what you are going to do.

评论
多谢各位专家的建议。 可惜不能加分。 have read that article, it's more likely to be income not matter by individual or enterprise.  also has consulted accountant who advice me to setup a trust account.  but based on my limited understanding/knowledge, it seems that we can't get away of "income treatment" even if trust has been setup.  in that case, 50% discount on capital gain seems not applicable as well (of course if we can prove it's capital not revenue if apply private ruling - too much hassle to do so).   if 50% capital gain discount not applicable, what the benefits of setup a trust？specially it's one-off project.  

评论

Thanks for your points.
澳洲中文论坛热点