Question Two (10 Marks)

Bob Slack is a builder who constructs new homes and also assists his customers with their home renovations. Bob is not currently registered for GST purposes. Bobs income from his building activities was $60,000 in the 2018/2019 tax year, and he expects to earn a similar amount during the 2019/2020 tax year.

In June 2019, he built an investment property which he began to rent out as a residence in July 2019. The rental income he earned from this enterprise was $5,000 per month. In June 2020, Bob was approached by a real estate agent asking whether he was interested in selling the investment property. The real estate agent had a client who was willing to pay up to $400,000 for the property. Bob is interested in selling the property but is concerned about the potential GST implications on the sale.

Required:

Discuss, firstly whether Bob will be liable for GST on the sale of his investment property; and would your answer be different if Bob was registered for GST. Show all calculations and refer to relevant legislation and to support your answer.

(10 marks) (250 words not including calculations)