is gst inclusive or exclusive at auctions?

Sometimes a contract for the sale of land will conflict with the actual final intention of both parties and, in such cases where there is a common mistake and there is clear proof of the common intention the Court can rectify the written contract. In SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2016] NSWSC 362, just such circumstances arose. The reserve price letter from the vendor was handed around prior to an auction stating that it was the intention of the vendor that GST will be added to the “knock down” price. The auctioneer restated the intent that the sale price was exclusive of GST and that the tax must be added to the price agreed upon at auction.

 

Subsequent to the auction of the property at $3.325 million the written contract stated “if a party must pay the price… to the other party under this contract, GST is not to be added to the price.” The NSW Supreme Court’s decision turned on the principle of whether there was a “clear and common intent” and that a “mutual mistake” had occurred in the written contract that did not reflect the final intention of the parties.

 

The Court found that the auctioneer’s statement and the reserve price letter were sufficient proof of intention being conveyed and that the purchaser entering the contract at auction was proof of a mutual intention to GST being exclusive. The purchaser was ordered to pay GST on top of the purchase price.

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