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GST obligation on change of use?

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  • GST obligation on change of use?

    A GST registered company purchases a residential property operating as a lodge which provides taxable supply accommodation. The sales and purchase agreement is inclusive of GST and not plus GST if any. The sale price is $1M inclusive of GST, the company is noted as GST registered on the S&P.
    The company operates the lodge for 3 years and then shuts it down and rents it out to a family under a standard residential tenancy agreement. GST is no longer charged. The value of the property is now $1.5M. Does the GST registered company need to make a GST debit adjustment in the next filing period, and does that adjustment need to be based on the purchase price ($1m), the current value ($1.5m), the difference between the purchase price and current value ($500k) or no adjustment based on the original S&P being inclusive of GST?

    Cheers
    Sparx

  • #2
    I'm almost certain that the IRD has a booklet on change-of-use situations including a matter just like you describe.
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