Investors are being warned not to agree to make a purchase of investment property on a GST-free basis, as they then will not be able to claim any input-tax credits.
"My advice is simple – purchasers of residential premises such as flats and units should not, under any circumstances, agree to allow the vendor to convert the sale to the GST-free supply of a going concern," Michael Hay of Melbourne-based accountants and business advisers Pitcher Partners says.
The catch, Hay points out, is due to an anomaly in the Australian Taxation Office's final ruling on when the supply of a ‘going concern' can be made GST-free.
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