28 Sep 2016
Goods & Services Tax on purchase of farmland
Consider George’s case
George has been farming potatoes in Trentham as part of the family business for many years. He has finally gathered together enough funds to purchase his first farming property. George is concerned about the Goods & Services Tax (GST) applicable to the purchase as the vendor is registered for GST and has indicated there may be GST charged on top of the purchase price.
There will be no GST applicable to the purchase of farmland if the following conditions are met.
• The land was used for a farming business for at least five years immediately before the sale; and
• The buyer intends to use it for a farming business; and
• Both parties to the contract are registered for GST; and
• The contract clearly specifies there will be no GST charged
In review of these conditions, George has confirmed with the vendor that they have been operating a farming business on the property for over five years and that they are GST registered. George also intends to run a farming business on the land, has himself registered for GST and confirmed with his legal representative that the contract correctly identified the transaction is to be GST free purchase of farming land.
Should you wish to discuss further please feel free to contact Andrew Marshall or Janine Orpwood on 5427 8100 for an initial consultation.