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Federal Court of Australia

The Australia Taxation Office (“ATO”) has appealed to the High Court the decision in the case of MBI Properties Pty Ltd v Commissioner of Taxation. If the High Court is to grant the appeal, GST liability could potentially transfer from the current landlord to the landlord at the time the lease was contracted. The Federal Court holds the view that the landlord who contracted the lease, should be liable for the GST, irrespective of the land being sold.

Currently, the ATO would pursue the current landlord for all GST owing on rent despite the GST being formed through rent paid before the purchase. The ATO has stated that it will continue to follow the current process until the outcome of the High Court case is finalised.

Should the Federal Court’s decision be upheld, landlords who have paid GST after purchasing a premises with an existing lease, may be entitled to a refund of the GST paid.

To see the case, click here.

If you would like to discuss this case further, you should contact our property team at Matthews Folbigg on 9635 7966.


DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant law