A recent Administrative Appeals Tribunal decision has highlighted the necessity for any objective evidence to support a taxpayers intentions.
When assessing the correct taxation treatment of a property sale it can be a difficult process. Amongst the multitude of factors to consider is always the “intent of the taxpayer” when entering into the initial purchase of the property. Often this intention may only be communicated once the sale of the property has been completed. However it is vitally important that the objective evidence supports this stated intention. This objective evidence could include loan documentation, including initial application, correspondence with real estate agents and professional advisors, the method of accounting for expenses and further reinvestment over time.
This evidence needs to support the taxpayers position in determining if property transactions will be subject to GST as well as the capital versus income tax treatment of any profit on disposal.
If you have any questions regarding a proposed property investment or development please contact one of the team at Charman Partners.