What is the GST treatment of adjustments at settlement on property transactions?
ATO Position GST liability will depend in the usual case on whether the sale of the land itself is a taxable supply. • Scenario 1: The liability to pay the land tax and/or rates attaches to the vendor (and possibly the land) prior to settlement, and the vendor pays these charges. The adjustments in scenario 1 are regarded as part of the sale price, being the increase or decrease in consideration for the supply of land. There is no second supply. • Scenario 2: The liability attaches to the land prior to settlement, the vendor has not paid the charges, and the vendor directs the purchaser to discharge this liability. The adjustments in scenario 2 is regarded as a mere direction to apply some part of the consideration in discharge of the vendor’s liability elsewhere. The amount of consideration is no second supply. A different conclusion would be reached where there is an adjustment in settlement to reflect an identifiable second supply eg. where the consideration for the sale of land req
