Look Carefully for GST
Goods and Services Tax (GST) was introduced on 1 July 2000. How does GST work? Broadly, GST is 10% tax that you must pay on goods and services and other items that you have sold or consumed in Australia. GST registered businesses will usually include GST in the price of the goods or services they sell, which they can then claim credits for. All businesses whose GST turnover exceeds $75,000 must register. Businesses are also entitled to a refund if their credits for GST exceed what they have paid.
When a transaction involves the sale of real property purchasers, vendors should be cautious of GST clauses in business contracts. To avoid potential disputes and possible financial ramifications the contracts must be carefully drafted. The GST clause in the contracts must clearly indicate whether the contract price is GST exclusive or inclusive. In cases, when the contract price is GST inclusive, a clause should be inserted to allow possible recovery of GST from the purchase if it becomes payable. A separate clause dealing with the obligation to meet tax invoice requirements must be present in the business contract. Furthermore, the contract should stipulate whether special rules apply in calculating the GST payable such as the going concern exemption or the margin scheme.
In summary, it is important to obtain professional advice in relation to the GST implications on the sale of real property to avoid being caught out. Quinn Lawyers can review your contracts and inform you of any clauses in the contract. Contact us on 02 9223 9166 or submit an online enquiry here.