What is ‘Potential Residential Land’?
‘Potential residential land’ refers to land approved for residential use but currently does not have any residential buildings on it. According to the GST Act (S.195-1), this kind of land is eligible for residential purposes, even if no residence is presently built on it.
Key Points on GST Withholding Rules:
Application of Rules: GST withholding rules are applicable if the land is part of a property subdivision plan and is not being used for a commercial purpose.
Exceptions for GST-Registered Buyers: If a GST-registered buyer purchases the land primarily for business purposes that allow GST credits, then GST withholding rules do not apply.
Zoning and Use: The land can still be considered 'potential residential land' even if it’s zoned for commercial, business, or agricultural uses, as long as residential use is also allowed. Local government regulations, like needing a permit to build a dwelling, do not change this classification.
Subdivision Requirement: For the land to be involved in GST withholding rules, it must be part of a registered property subdivision plan. This is often seen in situations where buyers purchase vacant blocks as part of a house and land package.
Further Guidance and Contact Information:
If you have any questions or need more information about GST and potential residential land, please contact Tax Ideas Accountants & Advisers at +61 2 83181545. You can also book an appointment through our live online calendar.