A property developer sells a new apartment for $800,000 including GST. The purchaser is claiming the First Home Owner Grant. What is the GST-exclusive price the developer receives?
Correct Answer
D) $727,273
When a price includes GST, the GST-exclusive amount is calculated by dividing by 1.1 (or multiplying by 10/11). $800,000 ÷ 1.1 = $727,273. The GST component of $72,727 must be remitted to the ATO by the developer.
Why This Is the Correct Answer
The GST-exclusive price is the inclusive price divided by 1.1. $800,000 divided by 1.1 is $727,273, and the remaining $72,727 is GST the developer must remit.
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A GST-registered developer buys land for $200,000 including GST and builds a new house, which it sells for $550,000 including GST. Ignoring construction costs and assuming full input tax credits on the land, what is the net GST payable to the ATO?
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