Property Settlement Adjustments

A settlement adjustment is an adjustment that is made between the vendor and the purchaser in relation to matters such as rates and land tax on the sale of a property.

Given the large number of GST errors in relation to ‘settlement adjustments’ on Business Activity Statements, it is useful to consider GST Determination 2006/3, issued by the Tax Office last year.

This determination considers whether settlement adjustments for rates, taxes and other outgoings are taken into account in determining the consideration for the supply of real property.

It is useful because the legislation does not refer to ‘settlement adjustments’, and there is no readily available information regarding the GST implications of these adjustments. This determination seeks to help businesses by providing practical examples in relation to different settlement adjustment scenarios.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this Bulletin. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Bulletin is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.

· inadvertent;

· Division 7A transactions which occurred after 1 July 2004, following changes to the legislation allowing tax practitioners to intervene prior to the lodgement of the tax return; and

· transactions which appear contrived and planned intentionally to avoid Division 7A.

 

 

·  

·  

<< Previous

Next >>