This GST Determination, issued Wed 30.7.2014, states that payments made to a purchaser of real property, by a vendor, when the rent received falls below the rental yield guaranteed by the vendor of the real property for a specified period, give rise to an adjustment event for the purposes of Div 19 of the GST Act under certain circumstances.
DATE OF EFFECT: The Determination applies both before and after its date of issue.
[LTN 145, 30/7/14]
Extract from GSTD 2014/3
2. If the vendor’s supply of the property is a taxable supply, 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.3
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. For the purposes of the margin scheme in Division 754, the consideration that the purchaser provides for its acquisition for the property, is reduced by the amount of the payment received from the vendor.
(FJM Note: There are a lot of conditions wrapped around this, but this is where the Commissioner concedes the vendor and purchaser end up, if there are payments under a rental guarantee and those other conditions are met. The Commissioner might not be correct to assume the law requires all these conditions though.)