Residential property, Commercial property, Goods and Services Tax and Deregistration

A case study on how the GST law may have been manipulated

John Mclaren

Research output: Contribution to journalArticleResearchpeer-review

Abstract

When a residential property, being used for commercial purposes is sold to a buyer that intends to operate a professional practice from the premises and one of the vendors is registered for GST, what happens when the registered vendor deregisters from GST ten days before settlement? The purchaser expects to be able to claim the GST included in the price as an input tax credit but on settlement is not given a tax invoice. The purchaser then lodges the Business Activity Statement (BAS) claiming an input tax credit without a tax invoice. The purchaser believed that the Commissioner of Taxation would exercise his discretion under s 29 - 70(2) or under s 29 - 10(10) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth), (GST Act) and treat the contract for sale as a tax invoice. The justification for this action being that the vendor deregistered from GST in order to retain the GST. In the case study presented in this paper the Commissioner of Taxation disallowed the purchasers’ claim for the input tax credit. The main question examined in this paper is whether it is within the spirit of the GST legislation for a vendor to deregister just before settlement, not provide a tax invoice and keep the GST?
Original languageEnglish
Pages (from-to)1-14
Number of pages14
JournalCanberra Law Review
Volume10
Issue number3
Publication statusPublished - 2011
Externally publishedYes

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title = "Residential property, Commercial property, Goods and Services Tax and Deregistration: A case study on how the GST law may have been manipulated",
abstract = "When a residential property, being used for commercial purposes is sold to a buyer that intends to operate a professional practice from the premises and one of the vendors is registered for GST, what happens when the registered vendor deregisters from GST ten days before settlement? The purchaser expects to be able to claim the GST included in the price as an input tax credit but on settlement is not given a tax invoice. The purchaser then lodges the Business Activity Statement (BAS) claiming an input tax credit without a tax invoice. The purchaser believed that the Commissioner of Taxation would exercise his discretion under s 29 - 70(2) or under s 29 - 10(10) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth), (GST Act) and treat the contract for sale as a tax invoice. The justification for this action being that the vendor deregistered from GST in order to retain the GST. In the case study presented in this paper the Commissioner of Taxation disallowed the purchasers’ claim for the input tax credit. The main question examined in this paper is whether it is within the spirit of the GST legislation for a vendor to deregister just before settlement, not provide a tax invoice and keep the GST?",
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Residential property, Commercial property, Goods and Services Tax and Deregistration : A case study on how the GST law may have been manipulated. / Mclaren, John.

In: Canberra Law Review , Vol. 10, No. 3, 2011, p. 1-14.

Research output: Contribution to journalArticleResearchpeer-review

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