- New Zealand Inland Revenue is consulting on GST treatment of deposits in cancelled land sale agreements.
- GST does not apply to deposits because no supply is made in return.
- GST output tax or input tax credit must be reversed when the agreement is cancelled.
- No transfer of legal ownership occurs in a cancelled agreement, meaning no supply of land takes place.
- Forfeited deposits are compensation for the buyer’s failure to complete the purchase, not payment for a supply.
- Comments are due April 17.
Source: news.bloombergtax.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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