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06 Jun 066 GST on forfeited deposit - Reliance Carpet Company

The AAT has held that the taxpayer was liable to pay GST in respect of a deposit that was forfeited to it upon the recision of a contract for the sale of real property. The AAT said, at para 20:

"The [taxpayer] has argued that by rescinding the contract it did not make a supply. The Tribunal agrees with this proposition. The supply was made when the deposit was paid upon entering into the contract. The subsequent rescission and forfeiture had the effect that the protection afforded by s 99-5 no longer applied and the payment thereupon was to be treated as a consideration for a supply attributable to the tax period during which the forfeiture occurred."

Reliance Carpet Company Pty Ltd and FCT [2006] AATA 486 (AAT, Olney DP, 5 June 2006).

For a copy of the decision, go here

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