The case concerned a loan/vendor financing agreement, and whether the vendor of land received all of the consideration at settlement for the purposes of the attribution rules in s 29-5 of the GST Act .
By a contract for sale dated 14 March 2008, the taxpayer agreed to sell property ("the Property") to a purchaser ("the Purchaser") for $3,177,650 plus GST. The Purchaser, prior to settlement, notified the Taxpayer that it was unable to pay the whole amount of the purchase price at settlement.
On settlement on 16 May 2008, the taxpayer received from the Purchaser $2,017,885 by way of cheques and entered into a Settlement Balance Facility Agreement ('SBFA') with the purchaser for the balance of $1,498,682.69. The taxpayer secured payment of the balance owing by the Purchaser with a mortgage over the Property.
On settlement, the Property was transferred in favour of the Purchaser capable of immediate registration. The transfer instrument recorded the consideration of $3,495,403.50.
The AAT concluded that for the purposes of the GST Act, all of the consideration in relation to the sale of the Property was received by the taxpayer at the time of settlement on 16 May 2008. Consideration consisted of the cheques totalling $2,017,885 provided by the Purchaser to the taxpayer at settlement plus $1,477,520 provided for under the Settlement Balance Facility.
The Decision Impact Statement states:
"The findings made by the Tribunal are consistent with principles set out in GSTRs 2001/8, 2003/12 and GSTD 2004/4, and are consistent with the submissions that the Commissioner made to the Tribunal, in this case, that:
- for a taxpayer that accounts on a cash basis, attribution of GST or an input tax credit is determined by the meaning of 'consideration' and whether 'consideration' was received or provided and not by reference to the ordinary meaning of 'cash';
- in a vendor financing arrangement, consideration is received by a supplier on set-off of the loan against amounts owing to the supplier by the purchaser;
- the postponement of payment of a debt does not constitute a loan where the recipient remains obliged to pay for the supply under the original supply contract; and
- where there is a contract for sale of land and a vendor financing agreement, the financing agreement is not ancillary or incidental to the contract for the sale of land."