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GST - APARTMENT INVESTORS WARNING PART 2 |
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Judging from
the response to my last newsletter - Apartment Investors Warning - there are a number of persons who require
further 'education'. All of the
queries I received attempted to point out that vendors, not purchasers, have
an exposure/liability to remit GST to the ATO. Indeed some
suggested that the only way the purchaser could have been required to pay any
GST in the example I quoted, was, if under the original Agreement to acquire
the business as a going concern there existed a provision to enable the
vendor to recover GST from the purchaser if the sale was in fact a taxable
supply. Sorry, but all of those persons who raised this issue
were all incorrect! In the case in
question I made it clear it was a GST free sale by the vendor of a going
concern. I did not state this status was disputed and the vendor had to
subsequently remit GST! Therefore, any
clause giving the vendor permission to recover any GST owed by the vendor to
the ATO is not relevant, as the vendor owes no GST to the ATO! The vendor has
no liability, no exposure, no problem. It is, in my example, the purchaser's
problem! If persons would actually care to read section 135 of the GST Act, they will be perhaps surprised to see this section causes an adjustment (GST) to be paid by the purchaser to the ATO. Just to give
you something more to think about, section 135 also applies to purchasers (not sellers) of
farmland that was acquired GST free by virtue of the fact that the purchaser
intends to carry on a farming business on that land (and subsequently does
not do so)! It is great to
get a response to my newsletters - it means you are reading them!
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