End Of GST Grandfathering Provisions

From 16 August 2012 all rental payable under commercial leases will potentially become liable to GST.

The general rule under the Goods and Services Tax (Jersey) 2007 is that if a landlord is registered or registerable for GST, then GST is chargeable on rental in a lease of commercial property. When the GST law came into effect, grandfathering provisions were agreed which meant that where a lease was entered into before 17 August 2007, rental or other supplies under a lease would not incur a GST liability for a period of five years from that date or until the lease was varied, whichever was earlier.

Therefore, from 16 August 2012, all rental payable under commercial leases will potentially become liable to GST, and this is irrespective of whether the landlord can recover that additional 5% from his tenant or not. The problem is that a lot of leases created before the GST law came into effect are silent as to whether the tenant has a liability to pay any future