In Scenario 2, if the contract settles as expected, does GST apply to the: (a) sale price; (b) non-refundable deposit; and (c) licence fee?
(a) Yes, the sale price is consideration for the supply of real property. The supply is made when the property is made available to the recipient (subsection 6(3) of the Transition Act). We interpret ‘made available to the recipient’ to be the time of settlement of the sale contract. This is because it’s at this time that equitable ownership and possession of the property transfers to the recipient and the recipient has full use and enjoyment of the property. Given that the contract settles after 30 June 2000, the supply of property is made after that date and for that reason, the supply is subject to GST (subsection 7(1) of the Transition Act). (b) On settlement of the contract, the non-refundable deposit that was initially the consideration for a supply that was the ‘entry into an obligation to do anything’ now becomes part of the consideration for the supply of the property (ie the sale price). See the answer to 3(a) above. (c) No, the licence fee is not subject to GST because it is
Related Questions
- 1. In Scenario 1, if the contract fails to settle and the property is sold under another contract after 30 June 2000, is the sale subject to GST?
- In Scenario 2, if the contract doesn settle, does GST apply to the: (a) non-refundable deposit; and (b) licence fee?
- Does the artist (art centre acting as an agent) charge GST on the sale price of the artwork?
