Use of an associate to obtain Goods and Services Tax ('GST') benefits on construction of residential premises for lease

A land owner, who may or may not be registered for GST, plans to construct residential premises to lease to third parties. 2. The land owner engages its associate to construct the residential premises. 3. The associate either undertakes the construction or engages an arm's length builder, and claims input tax credits on its acquisitions. 4. The associate does not seek progress payments from, nor issues an invoice to, the land owner until the premises are ultimately sold. 5. The land owner leases the completed residential premises to third parties (an input taxed supply). 6. The associate only remits GST upon the sale of the residential premises by the land owner. 7. The basic features of this arrangement can be summarised diagrammatically as follows: