Use of the Grouping provisions of the GST Act to avoid Goods and Services Tax (GST) on the sale of new residential premises

Two or more entities apply for approval as a GST group, or are currently members of a GST group. The entities may be new or existing. 2. A group member owns or acquires land and constructs or arranges the construction of residential units/houses on the land. 3. The group member sells the units/houses to another group member without levying GST. (A supply between GST group members is treated as if it were not a taxable supply). 4. The acquiring group member sells the units/houses to third parties, and treats the sales as input taxed for GST purposes. The sale is claimed not to be that of "new residential premises", having previously been sold within the group. (Supplies of new residential premises are taxable supplies). 5. Despite the acquiring group member treating the sale of the units/houses to third parties as input taxed, the GST group claims input tax credits on the costs of constructing the units/houses and/or the acquisition of the land.