This precedent is for use with the 2005 or 2014 edition of the Contract for Sale of Land by the Law Society of NSW and Real Estate of NSW.

This precedent supplements clause 13 of the standard contract which provides for:

·                GST adjustments;

·                sales of a going concern;

·                sales under the margin scheme; and

·                warranties by the purchaser to protect the vendor if the contract provides that the contract is not a taxable supply; and

·                the vendor’s obligation to provide a tax invoice.

The contract provides for the purchase price to be grossed up and for the GST component to be shown in the relevant section on the first page. The vendor may not want to do this and if not, option 1 is suggested. The clause provides that the purchase price is exclusive of GST and that the purchaser must pay the amount of GST payable by the vendor.

Parties may be uncertain about whether GST applies or if it does, the extent to which it does.  Option 2 allows the parties to seek a private ruling on the subject and provides alternatives depending on whether the ruling is received before or after settlement. If the ruling is received after settlement, the special condition provides a mechanism for valuing those components of the sale that are liable to GST and the amount of GST to be paid.

Vendors who are selling farm land which has been used for farming for at least 5 years and who accordingly are eligible for the benefit of A New Tax System (Goods and Services Tax) Act 1999 (Cth) section 38.480 should protect themselves against the purchaser not farming on the land. Option 3 is suggested for that purpose. See the ATO summary of the farm land exemption https://www.ato.gov.au/General/Property/Property-used-in-running-a-business/Working-farms/