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Summary of Effect of GST on Contracts

 

Goods and Services Tax can affect contracts depending on when the contract was made, whether there is an opportunity to review and whether the recipient is entitled to full input tax credit. These factors dictate when supplies will be GST-free.

There are 3 options concerning who and how the GST is paid:

1. Supplier pays the GST based on the existing price of the supply

2. Supplier pays the GST based on the revised price

3. Recipient pays the GST (even if they are not registered for GST) based on the existing price of the supply – this option only takes effect if the recipient either elects to pay the GST or does not accept an arbitrated offer of a price revision.

 

Status of Contract Contract made before 2 December 1998 Contract made on or after 2 December 1998and before 8 July 1999 Contract made on or after 8 July 1999
No opportunity to review. Recipient entitled to full input tax credit Supplies GST-free to 1 July 2005. If contract paid in full before 2 December 1998, all GST-free Supplies GST-free to 1 July 2005.Contracts may be renegotiated to cover post-30th June 2005 supplies Not GST-free for supplies on or after 1 July 2000.
Opportunity to review.
Recipient entitled to full input tax credit
Supplies GST-free until earlier of first opportunity to review, or 1 July 2005. If paid in full before 2 December1998, supplies GST-free until first opportunity to review Supplies GST-free until earlier of first opportunity to review, or 1 July 2005. Not GST-free for supplies on or after 1 July 2000.
No opportunity to review. Recipient not entitled to full input tax credit Supplies GST-free to 1 July 2005. If contract paid in full before 2 December 1998, all GST-free. Not GST-free for supplies on or after1 July 2000. Not GST-free for supplies on or after1 July 2000.
Opportunity to review. Recipient not entitled to full input tax credit Supplies GST-free until earlier of first opportunity to review, or 1 July2005. If paid in full before 2 December1998, supplies GST-free until first opportunity to review. Not GST-free for supplies on or after1 July 2000. Not GST-free for supplies on or after1 July 2000.

 

Our dedicated team can assist you with all your accounting and GST related matters. Complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.