Many commercial property sale contracts are subject to the addition of Goods and Services Tax (GST) in the purchase price. It is important that investors, as well as practitioners, take note of whether a contract will be subject to GST prior to the contract signature.
What this means is that GST is added to the price listed on the contract (and recorded on the corresponding Transfer Form 1) at settlement and that a higher, GST inclusive amount must be paid by the buyer at settlement.
A buyer should ensure that their lender is fully aware that the contract price does not include the GST that will be charged on a contract, and make arrangements so that the GST amount is covered when funds are required for settlement. Currently, the GST rate in Australia is 10 per cent.
A GST Determination ruling by the Australian Taxation Office determined that adjustments made to the settlement amount (such as but not limited to rates, water and land tax) must be taken into account when a final settlement payment is made.
I encourage practitioners to read the ruling above and contact me at email@example.com should you wish to discuss the effect of this ruling.
If you have any questions regarding conveyancing or would like to acquire Greenhalgh Pickard for a matter you can also contact us on 07 5444 1022.