Question Two

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.Bob's 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.