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.

For source of ATO view, refer to:

• the general principles in GSTR 2000/8 Goods and services tax: special credit for sales tax paid on stock
• paragraphs 32 and 33 and the general principles in GSTR 2000/14 Goods and services tax: transitional valuation of work-in-progress for head contractors in the building or civil engineering industries.

(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?

ATO position

(a) In-ground pool partly complete as at 1 July 2000
As a general principle, GST applies to supplies made on or after 1 July 2000. Supplies generally occur when the item is made available to the recipient, or in the case of services, when the services are performed in accordance with section 6 of the GST Transition Act.

A special rule is contained in section 19 of the GST Transition Act for construction contracts entered into before 1 July 2000 but not completed by that date. The rule ensures that not all of the value of work and materials under such contracts is subject to GST. In the absence of this special rule, the entire value of a contract completed after 1 July 2000 may be subject to GST even though some of the work may have been undertaken prior to 1 July 2000. The special rule provides that goods or real property supplied in the construction of a building or civil engineering work in accordance with a written agreement made before 1 July 2000 and made available on or after 1 July 2000 is only subject to GST on the value of the work completed after 1 July 2000.

The supply and installation of an in-ground swimming pool falls within the types of works covered by this rule. To take advantage of the special rule, a valuation must be made as at 1 July 2000 of all work and material permanently incorporated on the site in accordance with the agreement. GST will only be payable on the difference between the total value of the supply and the value as at 1 July 2000. ATO Public Ruling GSTR 2000/14 explains how and when the valuation must be done. Consequently, where the construction of an in-ground swimming pool started before 1 July 2000, however, was not completed until after that date, the GST payable on the supply of the completed swimming pool will be based upon the value of the work done on or after 1 July 2000.

(b) Sales tax and GST
A pool that has been partly completed before 1 July 2000 and has been subject to sales tax would be included in the value of work completed as at 1 July 2000 and would not be subject to a further GST liability (GSTR 2000/8 and paras 32-33 GSTR 2000/14)

The provision (section 16 of the GST Transition Act) that allows a special credit in relation to sales tax already paid does not apply as an in-ground swimming pool does not qualify as goods on hand because it is affixed to the land.