In the traditional European Union VAT system, the supply, before first occupation of immovable property, is generally taxable while other supplies of immovable property are generally exempt. In more modern GST/VAT systems the first sale of residential premises is generally taxable whereas supplies between otherwise unregistered consumers are generally exempt or outside the scope of GST/VAT. The consumption value of residential premises generally appreciates in value over time. Therefore, the value of total consumption may be greater than the value of residential premises at the time of first acquisition. This is problematic, as the objective of GST/VAT is to tax consumption. Application of the current approach means that there may be consumption which is not included in the GST/VAT base.

This thesis considers two alternative approaches to the current GST/VAT treatment of supplies of residential premises. The first of these involves including imputed rent in the GST/VAT base. The second alternative approach involves including sales of residential premises between otherwise unregistered homeowners in the GST/VAT base. This thesis compares and evaluates these approaches to find whether either of these produces a result which is more consistent with the GST/VAT policy objective of taxing consumption compared to the current approach.