A property developer in Queensland sells a new townhouse for $550,000 including GST. The developer is registered for GST and the margin scheme does not apply. What amount of GST must be remitted to the ATO?
Correct Answer
A) $50,000
The GST component is calculated as 1/11th of the GST-inclusive price. Therefore, $550,000 ÷ 11 = $50,000 GST must be remitted to the ATO. The developer can claim input tax credits for GST paid on construction costs.
Why This Is the Correct Answer
GST is 10% of the GST-exclusive price, so the GST inside a GST-inclusive price is one eleventh of it: $550,000 / 11 = $50,000. New residential premises sold by a registered developer are taxable supplies when the margin scheme is not used.
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