The ATO recently released GSTR 2009/4: New residential premises
and adjustments for change in creditable purpose. The ruling
provided relief for property developers providing them with the
opportunity to claim a portion of input tax credits on construction
costs while renting out new residential premises so long as the
properties were being held for sale. However, the recent AAT Case,
GXCX and Commissioner of Taxation ("GXCX"),
highlights that developers still need to be cautious when applying
this approach.
The Facts
In GXCX, the taxpayer developed approximately 91 apartments in
2000 and 2001. The apartments were marketed for sale before and
during construction. In December 2001, when the development was
completed, 22 apartments remained unsold and were rented. A further
10 apartments were then sold in 2008 and 2009. The taxpayer claimed
input tax credits on the full construction costs. The issue which
was the subject of the Tribunal decision was whether they
