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GST and vendor financing

A follow on from my re-blogged post below on vendor financing and the GST impact.

The Australian Tax Office has issued a “Decision Impact Statement” on the Mathiesen case confirming it is consistent with earlier rulings they gave. The key points are:

1. For GST purposes “consideration” has a broader meaning than merely “cash”.

2. When there is vendor finance “consideration” is received in the form of the obligations entered into by the purchaser under the loan which set off the payment obligation.

3. Vendor financing is distinguishable from cases where there is a postponement of payment of the purchase price. In these cases whether GST is payable up front on the entire purchase price depends on whether the supplier is registered on the cash or invoice basis and on other specific rules in the GST Act.

4. Where vendor financing is provided as part of a sale and purchase of property the financing arrangement is not “incidental and ancillary” to the sale agreement.

The full Decision Impact Statement is here:

http://law.ato.gov.au/atolaw/view.htm?docid=%22LIT%2FICD%2F2013-0341%3B2013-0342%2F00001%22

Iain

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