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On 9 April 2014, the ATO released for public comment by 9 May 2014 draft GST Determination GSTD 2014/D2 entitled "Goods and services tax: do payments made by a vendor to a purchaser of real property when the rent received falls below a rental yield guaranteed by the vendor give rise to an adjustment event for the purposes of Division 19 of the A New Tax System (Goods and Services Tax) Act 1999?"

The answer to the question posed is Yes in the circumstances specified in para 1 of the draft.

The draft continues:

"2. The vendor will have a decreasing adjustment to the extent that the GST liability applicable to its supply of the real property with a guaranteed rental yield was attributable to a prior tax period.2

3. If the purchaser's acquisition of the property is a creditable acquisition, the purchaser will have an increasing adjustment to the extent that its entitlement to an input tax credit was attributable to a previous tax period.

4. In cases where the purchaser acquires the real property by way of a supply that is not ineligible for the margin scheme3, the consideration that the purchaser provides for its acquisition for the property, for the purposes of the margin scheme in Division 754 is reduced by the amount of the payment received from the vendor.

5. Rental guarantees that are not covered by the circumstances set out in paragraph 1 are outside the scope of this draft Determination. Whether payments made under such rental guarantees give rise to adjustments would require consideration of all the relevant facts and circumstances."

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