The Tax Office has released a key ruling that it claims makes ineffective the use of joint venture and grouping provisions of the law to avoid GST on the sale of new property.
Tax Commissioner Michael Carmody says the arrangements are being further investigated and are likely to be challenged under either the general anti-avoidance or general provisions of the GST laws.
After issuing a taxpayer alert in January, the ATO has released a further three alerts following more detailed analysis of information obtained through audit activity, including information held by a middle-tier accounting firm that has been actively promoting the arrangements, especially in Queensland.
"Promoters and developers should take note the Tax Office will not restrict its scrutiny to new cases but will review existing purchases which have used these or any related arrangements," he says.
Generally, Carmody says these arrangements take advantage of the fact that while the sale of a new property attracts GST, the sale of an existing property does not.
For example, a concession within the grouping provisions allows one member of the group to sell a new property to another member of the group without charging GST.
When the property is sold on to a consumer, no GST is charged because it's claimed the property is no longer new.
Carmody says final rulings or determinations will be issued in the next few months. In the meantime, the alerts and ruling are available at
www.ato.gov.au.