I do not own any commercial property and have no plans to buy one anytime soon. However, for those who currently have one, perhaps you may want to know that if the commercial building is not completed by 31 March, GST will be levied. Of course, not the whole project but only on the uncompleted portion. If 50% is completed, then the remaining 50% would see GST being imposed. Now, for the good news, at least to buyers. Without a clause in your current agreement, then the tax will have to be absorbed by the developer. The GST would then be decided between developer or contractor as they also have their own agreements.
According to BDO tax/GST executive director, Jeff O’Connell, the GST will definitely bring a slight increase in property prices in general, maybe 2-3%. This cost woll be either passed to the buyer or absorbed by the developer but would definitely not be as high as 6%. Nevertheless, GST would actually lower the costs to businesses in some instances as GST input tax could be claimed unlike the current sales and services tax which could not be claimed. In Australia’s case, pricing was monitored for 12 months before GST and up to two years later and within this period, 51,000 complaints were received, 7,000 investigations and 11 prosecutions and A$21 million was returned to two million customers. The “The Price Control and Anti-Profiteering Act is in place to safeguard against profiteering from the implementation of GST,”.
Personally, I like GST. I do not like it when a certain segment of the market are always skipping the tax through false reporting of expenditures. Dinners with families are put up as business costs, thus rendering the business without profits and thus paying no tax. There are also a lot of other professions which EARNS huge money but pays zero or no tax at all. With GST, you buy more, you pay more. The tax is now on a much wider scale than today which is based on such a small % of the working population. Out of 12 million population, only 1.7 million currently pays tax. Yes, I have been paying tax ever since my first year of working and my mother’s advice has been the same, ‘Do not be afraid to pay tax because the higher your tax bracket proves that you earn ever higher earnings’. If GST is wrong, the majority of any country in the world is wrong.
written on 17 Aug 2014
Next suggested article: Soaring and Tumbling after GST like Australia? Not likely.