The ATO has just released an ATO ID which significantly changes the public position advocated since the inception of GST regarding the claiming of input tax credits where a property is built for sale, but subsequently rented pending sale.

The ATO position is significantly more favourable for taxpayers.

Where:-

• a property is developed with the original intention to sell all completed properties;
• full GST credits are claimed;
• on completion not all properties are sold, and some are rented out to assist meeting holding costs;
• while being rented, the properties continue to be held and marketed for sale;
• only a minimal GST adjustment is required

The general ATO view has been that when property is rented, 100% of the GST credits claimed relating to the construction of the property needed to be paid as a GST adjustment.

As the changed position is a significant concession, any taxpayer that has used the previously advocated position, should urgently review their position with a view to seeking refunds of any GST credits previously adjusted.