Tax hike averted

The Property Council of Australia applauds the Government’s decision to scrap the GST reverse charging measure in this year’s Federal Budget that would have inadvertently forced property owners to pay hundreds of millions of dollars in additional stamp duty.

Currently, most commercial investments are sold as going concerns and are GST-free.　Under the Government’s original proposal, these transactions would attract GST but with a reverse charge arrangement that allows vendors and purchasers to agree a tax offset and achieve the same GST outcome as the current rules.　　

There was a significant risk that state revenue authorities would view the reverse charge arrangements as part of the purchase price, and charge stamp duty on the notional GST amount. This could have meant additional stamp duty on the sale of a $100 million tenanted commercial property of around $5,000 in NSW for example.

This announcement is a sensible and pragmatic decision, which the Property Council has been discussing with Government for some time and has restored certainty for investors.