- Inland Revenue issued a draft QWBA on the GST treatment of subdivision projects
- Understanding when a subdivision project qualifies as a taxable activity is important for GST treatment
- The concept of taxable activity affects the GST treatment of the property, GST change in use, ability to claim GST on development costs, and GST treatment after the project is complete
- The draft QWBA provides examples for clear situations but lacks guidance for cases on the margin
- Taxpayers must prove a change of intention if it occurs during a development
- Seek guidance to understand GST and income tax implications before a transaction
- Factors such as scale, development work, lots created and sold, time and effort invested, financial commitment, repetition, and alignment with an existing taxable activity determine if a subdivision project is a taxable activity
- Larger scale projects are more likely to be considered taxable activities, while the construction and sale of a single house within a subdivision project are generally not taxable activities.
Source: taxathand.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
