Information requirements in section 78F

(Clause 152(1) and (2))

Summary of proposed amendment

The Goods and Services Tax Act 1985 is to be amended to clarify that when a contractual purchaser in a land transaction nominates another person to receive the land, the contractual purchaser may provide information to the supplier as required by section 78F in relation to the nominated person. The supplier will be able to rely on the information provided when determining the GST treatment of the supply.

Application date

The amendment will apply from 1 April 2011.

Key features

Since a supply of land may involve a contractual purchaser nominating another person to become a recipient of the supply, the wording of section 78F is being clarified to ensure that the contractual purchaser may provide the information to suppliers in respect of the ultimate recipient’s circumstances. The section is also being amended to ensure that the supplier may rely on that information in determining the appropriate GST treatment of the supply.

Background

Section 78F of the GST Act requires the recipient of a supply that involves land to provide information to the supplier about their registration status and intentions in relation to the land. This information may then be used by the supplier to determine whether the supply is zero-rated or standard-rated. When the ultimate recipient is a person nominated by the contractual purchaser to the agreement for sale and purchase (a nominee), it is the nominee’s registration status and intentions in relation to the land that must be used to determine the GST treatment of the supply.

Since section 78F refers to the “recipient” as the person that is required to provide information, the section may be interpreted as not allowing the contractual purchaser to provide the information on the nominee’s (recipient’s) behalf and, as a result, not permitting the supplier to rely on that information. To avoid any doubt, the wording of the section is being clarified to ensure that the contractual purchaser may provide the information and the supplier may rely on it.