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06 Feb 14 GST: call option fee and consideration - GSTD 2014/2

On 5 February 2014, the ATO issued GST Determination GSTD 2014/2 entitled "Goods and services tax: where real property is acquired following the exercise of a call option, does the call option fee form part of the consideration for the acquisition for the purposes of subsection 75-10(2) of the A New Tax System (Goods and Services Tax) Act 1999?"

It was not previously issued in draft form.

The answer to the question posed is given as follows:

"No, the call option fee does not form part of the consideration for the acquisition for the purposes of subsection 75-10(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)."
 
The explanation states: "This is the case even if the agreement between the parties specifies that the call option fee forms part of the price for the supply of the real property. The operation of section 9-17 varies what may be the outcome under contract law."

On the same day, ATO Interpretative Decision ATO ID 2004/729 was withdrawn and replaced by GSTD 2014/2.


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