We have a 108 acre farm in Qld which is registered for GST and has been in steady operation for 12 years as a beef cattle farm. We are planning to sell the farm and understand that GST will be payable unless we sell it to another party who wants to carry on farming. We are in an area where the lifestyle buyer will probably be the more likely buyer so we are wondering about ways to get around this. If we wind up the partnership and sell all the cattle and do not operate as a farm for say 6 months to a year and then sold to a private buyer, would the sale be GST exempt?
This is a complex question. There are many factors at play here. Generally the GST is not payable when there is a going concern. Ie if the property is registered for GST and it is leased to a party who is operating a business at that premises then there is no GST payable.
However as I stated it is quite a complex question and I really think you need to sit down with a specialist in this specific legislation. GST can be complex and it is not one size fits all. There are exceptions to the rules. Who owns the property, who owns the business, Did you buy it as a going concern. etc etc. Also do not forget IF you do something for the sole purpose to avoid GST and or Income Tax then anti-avoidance provisions kick in and the path you undertake may be illegal.
Best advice would be get specialist advice and get written advice. I have a friend at BDO who could help. His name is Neil Billyard and he is the Tax Partner.
Hello Glory B,
short answer is yes GST is going to be payable on the sale if you cant manage a going concern sale.
but its probably not going to deter any developers, because they will simply claim the GST back so the net cost to them is going to be net of GST anyway
and either way, you will end up no worse off....if you sell with GST, you get to keep the other 10/11th of the proceeds, which would be exactly the same as if you sold as GST free going concern.
If it is a "lifestyle" buyer, the chances are they will want to run some cattle, grow some crop, do something.....so the GST free going concern option may still be on the table.......but they are paying the GST, you need to be able to stand your ground on price to say $XXXX PLUS GST if applicable........
and like AJ has stated, get some advice on this.....its too costly to get wrong!!