Issue buying property via a trust

Hi all,

I am trying to settle on some land that we have agreed to buy however the vendor is now saying that because we are buying via a trust (family trust), we must pay 10% GST on top of the advertised sales price.

In the contract it did not stipulate that purchasing via trusts/companies attracts GST on top of the sales price (and was never mentioned during discussions with the agent).

Has anyone else come across this problem?

Thanks
Al
 
NSW residential land.
No boxes ticked on the front page of the contract.
No special conditions that would exclude using trusts/company's to purchase the property.
Trust is registered for GST
Margin scheme? What is this?
 
If the contract says the price is GST inclusive, you should have nothing to worry about.

I don't see why the Buyer's status would change the Seller's GST liability. It's either a taxable supply or it's not, regardless of the Buyer being a trustee, individual or company.
 
NSW residential land.
No boxes ticked on the front page of the contract.
No special conditions that would exclude using trusts/company's to purchase the property.
Trust is registered for GST
Margin scheme? What is this?

Have you entered the contract yet?

What does your solicitor say?
 
Hi all,

I am trying to settle on some land that we have agreed to buy however the vendor is now saying that because we are buying via a trust (family trust), we must pay 10% GST on top of the advertised sales price.

In the contract it did not stipulate that purchasing via trusts/companies attracts GST on top of the sales price (and was never mentioned during discussions with the agent).

Has anyone else come across this problem?

Thanks
Al

Entities are never the subject of GST. The supply of the land is. You cannot turn GST on/off depending who the buyer is. Whether the buyer can claim or not isn't of concern. If it includes GST it includes GST and that wont change. But you cant add-on GST. The ACCC and relevant state fair trading would BOTH find that the agent conduct is misleading and deceptive conduct to market property that way.

Have they suddenly determined that the land is subject to GST based on poor prior advice and now the contract is defective and must be replaced??? In which case the former contract was incorrect ?? That's the only issue I see here. That or a stupid and inept vendor with a DIY tax approach
 
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Have they suddenly determined that the land is subject to GST based on poor prior advice and now the contract is defective and must be replaced??? In which case the former contract was incorrect ?? That's the only issue I see here.

And if that is the case it would be their problem not yours!
 
Terry - Yes I agree. The defective issue being in the mind of the vendor. The actual contract is what it is. The key issue is getting legal advice on if its a binding contract or its still an offer.

I reeks of a DIY tax advice situation. Unfortunately its way too common that someone wants to sell a property. They get a cheap contract drawn up - No discussion about GST. When it sells they ignore the GST issues to send the contract to their solicitor who then asks all the (correct) questions about GST clauses to reveal a huge hole. So they run back to the agent and tell them its plus GST.
 
Actually I should qualify my statement as it depends what is in the contract. I have seen a case where a lawyer didn't understand a condition which required the purchaser to pay any GST applicable on the sale - new residential property and was subject to GST $150,000 extra on top. Solicitor was at fault here.
 
Thanks for the advise - fantastic!

The contract is GST inclusive and we have signed our copy and are trying to exchange with the vendor.

To me this situation reeks of greed (i.e. the vendor/developer is trying to extract more money from us). If we purchase through individual names then no GST applies, trust/company then it applies! This is obviously crap as GST is not turned on by the purchasing entity (as noted by others in this thread).
 
Thanks for the advise - fantastic!

The contract is GST inclusive and we have signed our copy and are trying to exchange with the vendor.

To me this situation reeks of greed (i.e. the vendor/developer is trying to extract more money from us). If we purchase through individual names then no GST applies, trust/company then it applies! This is obviously crap as GST is not turned on by the purchasing entity (as noted by others in this thread).

To me this suggests that you need a clause that protects your **** when they realise how GST works.
 
The vendor has realised the error of their ways and contracts were exchanged on Friday afternoon. An unnecessary situation in my opinion.

Thank you to everyone for your advise. Much appreciated.
 
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