Sale or Purchase of Commercial Premises – GST Considerations
A timely reminder for clients.
Prior to entering into any contract for sale or purchase of a commercial premises, see us first so you know where you stand in respect of GST. We recently witnessed an interesting case whereby a buyer, who was registered for GST, purchased a vacant commercial property. The contract was marked as ‘no GST’ applied to the sale of the property, which was correct as the seller was under the compulsory GST registration turnover threshold of $75,000 p.a. (i.e. the seller was not registered or required to be registered for GST). Unfortunately due to an error at settlement, the buyer handed over an additional payment for the GST in addition to the purchase price. Problem => the buyer was unable to claim back the GST because the seller was not registered for GST and accordingly could not provide the necessary tax invoice. An expensive mistake for a buyer should the seller fall into an insolvent position post settlement.