Vendor financing   Leave a comment

Iain Blakeley

Useful recent Australian tax case on GST and vendor loans.

Mathiesen Family Trust v FC of T [2013] ATC 10-327, 15 July 2013.

The taxpayer agreed to sell land for $3.5m. The purchaser could only pay $2m on settlement and borrowed the balance of $1.5m from the vendor, secured by a mortgage over the land.

The vendor argued GST should be accounted for on only the amount received and in substance the financing arrangement was a deferral of payment of the purchase price.

The Court didn’t agree and decided the vendor did receive full consideration for the sale on settlement. It held the loan from the vendor was a separate transaction that permitted the purchaser to complete the purchase of the land. GST was therefore required to be paid on the full sale price including the amount of the loan.

I think a NZ court would reach the same conclusion…

View original post 62 more words

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Posted September 11, 2013 by Iain Blakeley in Uncategorized

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