Tax inputs and cost assumptions
Development GST and tax costs in a Victorian feasibility
Development GST and tax costs need transaction-specific inputs, not copied spreadsheet percentages. Separate the project’s commercial profit, cash payments and eventual tax treatment. Use this checklist to prepare the acquisition records, proposed sale structure and cost schedule for a registered tax agent and conveyancing professional. Their confirmed treatment should then flow back into the feasibility.
Sources for this overview: [1][2]
Prepared by Joey Don · Co-Founder & CEO, PremiumReaContent updated
Questions to resolve before committing
Read the answer with its assumptions and source notes. A planning rule can establish an assessment pathway; it cannot establish the price, funding or outcome for your property.
Should a development budget use GST-inclusive or GST-exclusive costs?
Either presentation needs a clear bridge to the cash actually paid and the credits genuinely available. Do not subtract GST from every invoice merely because the project includes a new dwelling. Ask the tax agent to mark creditable, non-creditable and mixed costs, then keep that classification with the estimate. An ex-GST commercial comparison still needs a cash schedule showing any period between paying a supplier and recovering an eligible credit.
Source: [3] ATO: GST at settlement
Can every backyard development use the GST margin scheme?
No. The margin scheme has eligibility requirements and the acquisition history matters. Prepare the original contract and intended sale documents for the tax agent before using a margin-scheme figure in an offer model. Keep an alternative tax scenario until treatment is confirmed. The practical question is not which spreadsheet setting produces a better result, but which treatment the actual purchase and subsequent sale can support.
Is the GST margin the same as the development profit?
No. A margin-scheme calculation uses the relevant acquisition consideration under its rules; it is not simply sale proceeds less all development expenses. Keep the tax working separate from the commercial cost ledger. Your accountant can identify the applicable method and supporting acquisition records, while the feasibility still includes construction, duty, holding and selling expenses in its profit calculation. One subtotal should never silently stand in for the other.
Source: [4] ATO: GSTR 2006/8, acquisition consideration and apportionment
Can the original purchase price just be split equally between two lots?
Not automatically. The allocation needs a fair and reasonable basis for the actual property, rather than an assumed equal split because two titles are proposed. Give the adviser the original house and land information, proposed boundaries and relevant valuation evidence. Record both the method and its supporting documents. A front/rear cost split used to make a spreadsheet readable is not itself an approved tax allocation.
Source: [4] ATO: GSTR 2006/8, acquisition consideration and apportionment
Is GST withholding at settlement an extra cost on top of the final GST?
Withholding is a payment mechanism that is credited in the tax process, not a second independent tax charge. Show the settlement deduction in cash flow and reconcile it against the eventual liability through the accountant’s workings. Keep a separate allowance for any remaining payment or later adjustment. Adding both the full withholding and full liability as unrelated final expenses would distort the project result and owner cash requirement.
Source: [3] ATO: GST at settlement
Can the retained front house and new rear house have different GST treatment?
Yes; existing and new residential premises can be treated differently, and substantial renovation can affect the analysis. Give the tax agent the scope of the front-house works as well as the rear-house plans. Do not classify the whole site from the word renovation or new build alone. Keep each dwelling’s proposed sale, associated expenditure and shared costs identifiable so the adviser can assess the relevant treatment.
Source: [3] ATO: GST at settlement
Can I use one fixed stamp-duty percentage for every Victorian purchase?
Use the applicable SRO calculation, not a universal percentage copied from another feasibility. General duty has value bands, and the transaction details can change the result. Record the contract date, dutiable value and any concession or surcharge question for the conveyancer. Keep a rough acquisition allowance visibly separate from the checked duty estimate, and refresh it when the purchase price or ownership arrangement changes.
Source: [5] SRO Victoria: general land transfer duty rates[2] SRO Victoria: land transfer duty calculator
Is a monthly land-tax allowance the same as the actual assessment?
No. Victorian land tax is assessed with reference to ownership at the preceding year end and the relevant taxable land holdings. A monthly accrual can help compare project scenarios, but it does not establish the bill or its due date. Check the owner’s wider holdings and exemptions with the adviser, then test whether a delayed settlement crosses another assessment date. Keep the actual payment in the cash schedule.
Source: [6] SRO Victoria: understanding your land tax assessment
Can I treat a pre-income-tax project profit as money available to spend?
No. A pre-income-tax result deliberately leaves a material question unresolved. Ask the registered tax agent to review the owner, acquisition intention, use history, development activity and proposed exit before estimating tax payable. Do not assume a capital-gains discount, home exemption or immediate use of a loss. Keep a tax reserve and remaining project liabilities separate from owner distributions until the relevant amounts and payment dates are established.
What records make a development tax review more useful?
Provide a coherent transaction file rather than only the calculator’s final profit. Include acquisition and proposed sale contracts, ownership details, plans, the use history, cost invoices, finance records and the dates when intentions changed. Mark estimates and missing evidence clearly. Ask the adviser to return the assumptions that affect the model in writing, so updated GST, state-tax and income-tax inputs can be traced to a reviewed version.
Turn the answer into a buying decision
- 1
Record the transaction history
Collect the purchase contract, ownership history, original use and intended development and sale arrangements.
- 2
Classify costs and sales
Mark GST-inclusive and exclusive amounts, possible credits, existing and new dwellings, and matters awaiting tax review.
- 3
Check state-tax inputs
Use the current SRO tools and relevant ownership details to review duty and land-tax assumptions.
- 4
Reconcile tax cash
Schedule payments, withholding and any later reconciliation separately; do not count a withholding credit as a second tax cost.
Evidence to request
- Purchase contract and ownership history
- Separate proposed treatment for each dwelling
- Cost invoices with GST and credit assumptions
- Documented acquisition-value apportionment question
- Current duty and land-tax review
- Settlement withholding and BAS timing
Bring the address and the assumptions
A clear brief includes the title, a preliminary concept, the intended exit and the available cash. PremiumRea can help organise the acquisition checks and questions for the planner, surveyor, builder, accountant and licensed credit professional.
Sources and scope
Government references support the specific rules attached to each answer. Feasibility methods explain how to organise a calculation; they are not prescribed tax treatment or a prediction of a project result.
- [1] ATO: GST and the margin scheme
Australian Taxation Office · Source checked
Eligibility and calculation methods; the margin scheme is not an automatic election for every sale.
- [2] SRO Victoria: land transfer duty calculator
State Revenue Office Victoria · Source checked
The estimate uses the contract date and dutiable value; the calculator also identifies exclusions from its coverage.
- [3] ATO: GST at settlement
Australian Taxation Office · Source checked
Withholding, supplier notification, BAS credits and the distinction between existing and new residential premises.
- [4] ATO: GSTR 2006/8, acquisition consideration and apportionment
Australian Taxation Office · Source checked
Paragraphs 48–61 of the linked consolidation explain purchase consideration and fair and reasonable apportionment. A tax adviser should confirm current application to the transaction.
- [5] SRO Victoria: general land transfer duty rates
State Revenue Office Victoria · Source checked
The general duty schedule uses value bands. A spreadsheet budget percentage is not the statutory calculation.
- [6] SRO Victoria: understanding your land tax assessment
State Revenue Office Victoria · Source checked
Assessment depends on ownership at the preceding 31 December and taxable land values, rather than a simple monthly project allowance.
Connect the next decision
Keep the questions with your feasibility file
Download the same questions, answers, stable page links and source notes for reference. The source date records when a reference was checked, not an approval or review of your property.
Original explanations are available under CC BY 4.0 with attribution to PremiumRea and a link to the relevant page. Third-party government material retains its own terms; this permission does not relicense it. CC BY 4.0
General information for property acquisition and feasibility. Confirm property-specific planning, title, legal, tax and lending matters with the relevant qualified professional. A scenario result is not an achieved return.