Is Starting a New Entity Always the Best Option for Development?
Establishing a new entity for property development isn't always the best choice. Here are some considerations:
Experience Matters: If the individuals involved have previous property development experience, setting up a new entity might not protect them from potential revenue account treatment. The ATO and courts may consider the experience of the people associated with the entity, not just the entity itself.
Utilizing Existing Structures: If there are carry forward losses in an existing entity, it might be better to use that structure to take advantage of those losses. However, ensure the losses are available and consider rules like trust loss rules or continuity of ownership tests for companies.
GST Implications: The sale of a property is only subject to GST if the entity is registered or required to be registered for GST. If a property sale by an unregistered entity wouldn't trigger GST, it might be beneficial to acquire the property in an entity not registered for GST.
Got questions? Reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.