General

What sorts of interests in real property will be GST taxable after 1 July 2000 (assuming they are not subject to the transitional rules)?

If the conditions for a taxable supply exist, all sales, leases and licences of real property will attract GST other than those that are:

GST- free; this category includes -

Input taxed; this category includes -

 

Will the GST apply to mortgage products - for example to the interest paid on mortgage products - and will mortgage documents need to be amended to pass responsibility for any GST to the borrower?

Mortgage providers will not be obliged to pay GST on the interest they receive from their customers as it is a financial supply and input taxed.
 

In the sale of property to which the GST applies, is stamp duty paid on the GST component as well?

Yes. Stamp duty is payable in respect of the consideration for the sale of real property and, where the purchaser is required to reimburse the vendor's liability for GST, that payment of GST is treated as part of the consideration.

 

Is it necessary to refer to GST in the Section 32 Statement?

The disclosure requirements of Section 32 are unlikely to be considered to extend to GST as it is not a rate, tax, charge or other similar outgoing 'affecting the land' or a rate, tax, charge or outgoing 'for which the purchaser may become liable in consequence of the sale'. All liability for GST remains with the vendor under the GST Act - what the purchaser may incur is an obligation to pay the vendor an amount equal to the vendor's GST liability on the sale. It is therefore probably not necessary although it does no harm, provided disclosure is made in a way that is accurate and not misleading.

 

Is there concern about early release of deposits in contracts for the sale of land?

No.  The ATO's position, as reflected in its final ruling on attribution under standard land contracts, GSTR 2000/28, is that early release of the deposit will not trigger attribution of GST.

 

In a conveyance where the purchaser has defaulted, is GST payable on the penalty interest?

The issue is whether interest payable for late payment is an adjustment to the consideration for the supply of the property or a financial supply and so input taxed. The ATO's ruling GSTR 2000/19 provides some guidance at paragraphs 29 and 30 and the position seems to be that the ATO would treat the interest as consideration for a financial supply. This would mean no GST is payable.

 

Is GST payable in relation to a deposit that has been forfeited on the rescission of a contract?

Yes.

Is this so even where the sale, had it proceeded, would have been GST-free or input taxed?

On the basis of current authority, that appears to be so; however, not in cases where the supplier is not registered or required to be registered or the supply is not in the course or furtherance of an enterprise.
 

What is the position with GST where a husband transfers property to his wife by way of love and affection?

The 'associate' provision of Division 72 of the Act deals with transactions for no consideration or less than market consideration between 'associates' (defined by reference to section 318 of the Income Tax Assessment Act 1936 and includes husbands and wives) and deem them a supply for market value - except where the recipient is registered for GST and would be entitled to a full input tax credit. However, unless the supplier (husband) is registered or required to be registered for GST purposes and the supply (gift) is made in the course of furtherance of an enterprise, it would not constitute a taxable supply in any event and GST would not be payable.

 

Where there is a taxable supply of land, is GST payable on the contract price or the adjusted purchase price at settlement?

GST is payable on the adjusted purchase price. See the ATO's Property & Construction Issues Register at paragraph 15.4.1

 

 

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