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ARTICLE · 29 APRIL 2021

GST in sales contracts – Get it right or you could regret it

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GST has been with us for over 20 years, but we still see contracts where GST treatment is wrong or badly expressed.

AustraliaTax
Tom Wood
Tom Wood
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People say that lawyers love "grey areas" and loopholes. I think this only applies to lawyers acting for clients who stand to win because of badly drafted contracts. The lawyers for the other side simply have to try to overcome the bad drafting.

The Goods and services tax (GST) has been with us for over 20 years, but we still see contracts where the GST treatment is wrong or badly expressed. This can have devastating consequences for whoever gets it wrong.

Where parties wish the GST to be added to the contract price, the contract should use specific words such as "plus GST".

Unfortunately, a common error here is to instead insert "exclusive of GST".

This cost a seller up to $1,475,000.00 in a case decided by the New South Wales Supreme Court.

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