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  • Property and Construction Industry Partnership - issues register - section 02 - building contracts

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    Issue Number Index Date History

    2

    Building contracts

       

    2.1

    What is the GST treatment of 'retention amounts'?

    08/01/2004 (u)

     

    2.2

    Renovations and second hand materials

    A builder, registered for GST, buys a house to renovate and sell as part of an enterprise of selling renovated houses. The house is renovated with second hand materials bought by the builder from someone who is not required to be registered for GST.

    (a) Is the sale of the renovated house a taxable supply?
    (b) Is the builder entitled to an input tax credit for the purchase of the house?
    (c) Is the builder entitled to an input tax credit for the purchase of the second hand materials?
     

    08/01/2004 (u)

     

    2.3

    You operate a business building concrete swimming pools. Sales tax is currently paid quarterly on the basis of the area of the pool. Sales tax is due after the pool has been concreted. Many new pools remain on new building sites half completed until clients are ready to move. As at 1 July 2000, you have partly completed pools on which sales tax has been paid.

    (a) How is a pool concreted before 1 July 2000 but completed after 1 July 2000 affected by GST?
    (b) If such a pool has already been subject to sales tax, is it exempt from GST?
     

    17/05/2013 (u)

     

    2.4

    What is the GST treatment of payments for building projects where the consideration is paid on a progressive basis?

    08/01/2004 (u)

     

    2.5

    If a builder incurs costs related to taxes and charges that are GST-free under the Treasurer's Division 81 Determination; and invoices a client separately for those costs, is the builder liable for GST?

    08/01/2004 (u)

     

    2.6

    How does a builder claim a credit for Wholesales Sales Tax (WST) when he does not know the amount of WST which has been charged?

    09/04/2001

     

    2.7

    Am I responsible for ensuring that a supplier's quoted ABN is correct?

    24/12/2003 (w)

     

    2.8

    If a registered subcontractor makes a taxable supply to a builder and fails to remit the GST to the ATO, can the builder (in the absence of fraud or collusion) be liable to pay this GST to the ATO?

    09/04/2001

     

    2.9

    If a subcontractor with an ABN does work for a builder and is paid all monies owing for that work, and the subcontractor subsequently fails to pay a PAYG income tax instalment to the ATO, can the builder be liable to pay the subcontractor's income tax?

    24/12/2003 (w)

     

    2.10

    A subcontractor who is in breach of a construction contract pays liquidated damages to the head contractor. Is the payment of liquidated damages by the subcontractor consideration for a taxable supply?

    17/05/2013 (u)

     

    2.11

    Is a subcontractor who pays liquidated damages to a contractor entitled to an input tax credit for the payment?

    08/01/2004 (u)

     

    2.12

    If there is an obligation on a subcontractor who is in breach of a construction contract to pay liquidated damages to the contractor, is the payment made by the subcontractor's insurer in settlement of the contractor's claim consideration for a taxable supply?

    09/04/2001

     

    2.13

    Does section 12 of the GST Transition Act apply to services provided by architects, engineers and surveyors?

    08/01/2004 (u)

     

    2.14

    Class of Tax Invoices that may be issued by the recipient of a taxable supply of construction work or related goods and services.

    09/04/2001

     

    2.15

    Where a manager (not being an employee of a principal contractor) is appointed to supervise the work of subcontractors and is entitled to receive a percentage (for example 10%) of the total value of the construction contract, will the manager now be entitled to claim 10% of the GST-inclusive value of the construction or will the manager's entitlement remain 10% of the GST-exclusive value of the construction contract?

    09/04/2001

     

    2.16

    Will unaffixed materials that have been paid for before 30 June 2000 be included in the value of head contractors' work and materials as at 1 July 2000?

    08/01/2004 (u)

     

    2.17

    How are payments made pursuant to a building contract spanning 1 July 2000 treated for GST purposes?

    08/01/2004 (u)

     

    'the GST Act'

    A New Tax System (Goods and Services Tax) Act 1999

    'the GST Regulations'

    A New Tax System (Goods and Services Tax ) Regulations 1999

    'the Transition Act'

    A New Tax System (Goods and Services Tax Transition) Act 1999

    'the Transition Regulations'

    A New Tax System (Goods and Services Tax Transition) Regulations 2000

    Relevant Public Rulings

    GSTR 2000/8 Special credit for sales tax paid on stock

    GSTR 2000/14 Transitional valuation of work-in-progress for head contractors in the building or civil engineering industries

    GSTR 2000/18 Construction and building services which span 1 July 2000

    GSTR 2000/29 Attributing GST payable, input tax credits and adjustments and particular attribution rules made under section 29-25

    GSTR 2000/35 Division 156 - supplies and acquisitions made on a progressive or periodic basis

     GSTR 2021/7 When is a sale of real property a sale of new residential premises?

    GSTR 2006/2 Deposits held as security for the performance of an obligation

    Relevant Determinations

    GSTD 2000/2 Can you claim input tax credits under Subdivision 66-A of A New Tax System (Goods and Services Tax) Act 1999 for goods that have been incorporated into second-hand goods prior to 1 July 2000?

    GSTD 2000/3 Transitional arrangements: to what extent is the supply of services made on or after 1 July 2000, where the supply spans that date?

    Relevant bulletins

    GSTB 2000/4 How to calculate and pay GST on a progressive or periodic supply that spans 1 July 2000.

    Relevant sections

    Division 11 'Creditable acquisitions' of the GST Act

    Section 29-25 'Commissioner may determine particular attribution rules' of the GST Act

    Section 40-65 'Sales of residential premises' of the GST Act

    Division 66 'Second-hand goods' of the GST Act

    Section 6 'Time of supply or acquisition' of the Transition Act

    Section 12 'Progressive or periodic supplies' of the Transition Act

    Section 19 'Construction agreements made before 1 July 2000' of the Transition Act

      Last modified: 12 Jun 2012QC 16479