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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 22320
Experience:  37 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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Can you please clarfy aero rated GST on a property purchase?

Customer Question

Can you please clarfy aero rated GST on a property purchase? Is it true that If purchaser is registered for GST then this becomes zero rated meaning that the seller doesn’t pay the GST back to IRD because he doesn’t physically receive it from the purchaser in a lump sum of cash in addition to the PP. The buyer doesn’t claim it as a GST expense from IRD . What happens when it comes time for that buyer to sell - are they required to pay any GST back to IRD based on the sale price?
Submitted: 7 months ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 7 months ago.
If you do not claim the GST when you purchase the property, then you do not pay the GST when you sell the property. This status can change depending on how you treat the property, but generally when it is not claimed you do not have to pay it. It operates on an in/out basis. This is described in sections 8 through to 11 of the Goods and Services Tax Act 1985
Customer: replied 7 months ago.
Thanks Chris, the S&P Agmnt did state plus GST but as no physical transaction took place how can we identify exactly what that amount was (as it was zero rated)? Also to add to that we have since lost the orchard due to PSA so the property is no longer operating a taxable activity. We are still gst registered but not for any purpose at the moment unless we can be in a position to replant something at some stage. How does that work when we go to sell in terms of gst?.
Expert:  Chris The Lawyer replied 7 months ago.
If it was zero rated then no GST would have been credited and since it is no longer trading, I would say no GST is payable

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