Q: A client bought farmland in October 1997 and has been farming there since. They're now negotiating to sell it. If the buyer plans to use the land for farming, no GST applies due to a farming business exemption.
If the buyer doesn't intend to farm:
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Will the land sale need GST added to the contract?
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Can the margin scheme be used since the land was bought before GST?
Here's the breakdown:
If the client isn't GST registered, the sale is exempt from GST, and the sale proceeds won't count towards their GST turnover.
If the client is GST registered, the sale might be taxable. But if the buyer plans to farm, it's GST-free.
If the buyer changes their mind and doesn't farm, they'll owe GST.
If the sale is taxable, the margin scheme can apply since the land was bought before GST.
If you have any questions, feel free to contact Tax Ideas Accountants & Advisers. You can also book an appointment through our live calendar.
