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GST and the problem with leases

Last week the Australian Taxation Office released two public determinations (GSTD 2012/1 and GSTR 2012/2) dealing with the GST consequences following the sale of leased premises.

One of the determinations addresses the GST consequences of a vendor selling tenanted residential premises, while the other determination deals with the sale of tenanted commercial properties. The determinations focus on the nature of the supply (or absence thereof) between the purchaser and a continuing tenant. In a commercial property scenario, this characterisation is important when determining whether the purchaser is obliged to account for GST on rent received after completion. However, it is the treatment of rent received by the purchaser of a tenanted residential property that may give rise to more obscure outcomes. More…