ARTICLE · 02 MARCH 2010

Greater GST obligations for mortgagees in possession

Gadens Lawyers

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Amendments to the GST law now in force have significant consequences for mortgagees dealing with default accounts.

AustraliaTax

Amendments to the GST law now in force have significant consequences for mortgagees dealing with default accounts.

Key points

If a mortgagee becomes a controller of a company, it must lodge a separate GST return as controller rather than including any GST in the lender's return as has generally been the practice to date.
Mortgagees should avoid becoming liable to pay GST at all on commercial rents by arranging for collection of rent without becoming a controller or supplier.

Returning GST as a controller

The Tax Laws Amendment (2009 Measures No. 5) Act 2009 commenced on 4 December 2009 and amended the GST rules for representatives of incapacitated entities. Certain key provisions took effect retrospectively from 1 July 2000. The new measures sought to ensure that representatives of incapacitated entities are responsible for the GST consequences that arise during their appointment. However, the amendments may have unexpected consequences for a mortgagee

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