Be wary of GST clauses in contracts

Written on the 7 February 2014 by Macmillans Waller Fry

A recent legal case in the Victorian Supreme Court has highlighted the importance of ensuring that the correct GST clause is used in business contracts.

A properly drafted GST clause can avoid any problems or unintentional financial consequences. The recent Victorian case involved a contract that failed to list GST as being inclusive or exclusive of the purchase price. As a result, the purchaser was not required to pay an additional amount on account of GST.

Many businesses that draw up contracts rely on template GST clauses to address the GST issues involved within the contract. Whilst template GST clauses can be useful, they can also be a costly mistake if businesses use them without a thorough understanding of how the GST works.

It is important to draft the GST clause in a way that ensures that the parties’ intentions are clear, and all GST matters are addressed. It is often a good idea to have contracts reviewed by a specialist before signing.

Author: Macmillans Waller Fry

 

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