GST Legislation

Let us have a moment of silence for the GST advisors…


Since the introduction of the GST they (GST Advisors) have always been looking for a way to recover GST paid incorrectly.

And the Holy Grail of this advice has always been how can we turn a supply of new residential premises into existing residential premises as this would increase the margin for the developer by the 10% GST.

Well, the Government has released an exposure draft the new Division 142 of the GST Act. These provisions will ensure that any mistakenly paid excess GST is treated as always  payable and in relation to a taxable supply where that excess has been passed on to another entity.

That’s right. Even if it is a GST export, if it was treated as a taxable supply, until the customer is refunded it IS A TAXABLE SUPPLY.

Because a GST amount is considered as always payable, no refund arises as the GST is taken to have been correctly payable. If an amount of excess GST that has been passed on is reimbursed, the excess amount stops being treated as payable on a taxable supply.

So even if you think you have a great GST refund idea, even the Holy Grail idea, don’t go and sell it to a property developer as they will get no benefit from it.

The only person who gets a benefit is their customers – as before the developer can get the GST back they have to refund it to the customer. Actually, the developer has to finance the refund.

So spend a moment thinking of the pain of our GST brothers…

By Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.

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