Sanity prevails over landlord GST payments on leases

Sanity prevails over landlord GST payments on leasesIn a major win for the property industry, backed by the Property Council, the High Court has unanimously confirmed landlords will not be forced to pay GST on leases once they sell a property.The original Federal Court decision in MBI Properties inadvertently turned the property world upside down by implying that landlords had to pay GST on leases even after they sold the property and no longer received the rent.Absurdly, the tenant could presumably either pay the new landlord money they were not owed or, arguably, refuse to pay part of the rent at all.No one even wanted to guess what the original landlord was going to do.The ground was set for widespread head-to-head battles between landlords, tenants and the Australian taxation Office (ATO) itself.The Property Council worked quickly with the ATO to prevent the issue spiralling out of control by confirming a freeze on the current law until an appeal could be launched and a tax fix designed, should the appeal fail.Happily, the appeal bore fruit and the ATO’s actions stopped the turmoil dead in its tracks.No doubt there is more work to be done in the coming weeks and Property Council is working with government to resolve any remaining issues quickly.