Are you selling commercial property that's GST inclusive?

When selling a property that’s inclusive of GST – which is often the case for commercial property – most sellers and agents know that the seller must provide a tax invoice to the buyer for the purchase price.

What is less well-known is that GST is also payable on other components of the purchase price, such as Shire rates.

This is set out in the Joint Form of General Conditions, which states in part (b) of clause 18.3:

(1) The Buyer must in addition to the Purchase Price pay the GST on the Purchase Price and any other consideration payable under the Contract

“Any other consideration payable under the Contract” includes Shire rates and other components of the purchase price.

Clause 18.3 (b) of the Joint Form of General Conditions also states that “the Seller must provide a Tax invoice to the Buyer.”

As such, bear in mind that when selling a property, the seller needs to provide a tax invoice for the Shire rates and any other components of the purchase price, not just the purchase price itself (although these can be combined into one invoice).

See the ATO’s legal database for more details on GST and settlement adjustments.

If you’re a real estate agent, reminding sellers that a tax invoice needs to be provided for all considerations payable under the Contract can help your client avoid unnecessary hassle with the tax office later on.

Image by Steve Cox via Flickr.