The Full Federal Court recently handed down its decision in
MBI Properties Pty Limited v Commissioner of Taxation
[2013] FCAFC 112 ("MBI Case").
The decision supports the view that neither the vendor or
purchaser of a tenanted property (a reversionary interest) makes a
new or continuing supply to the tenant following the sale of the
property. This may have significant GST implications in relation to
both tenanted residential premises (the lease of which is input
taxed) and tenanted commercial premises (the lease of which is
generally a taxable supply and subject to GST).
DECISION SUMMARY
The case was concerned with whether MBI Properties Pty Ltd
("MBI") had an "increasing
adjustment" under Division 135 of the A New Tax
System (Goods and Services Tax) Act 1999 ("GST
Act"). The adjustment potentially arose as a
consequence of MBI having purchased three tenanted residential
apartments on a GST–free basis as the supply of a
"going concern".
