As discussed in the bulletin, as well as giving effect to the change in Government policy to impose the GAIC liability on the purchasers of land (up until last Friday the GAIC was to be payable by vendors), the draft legislation contains an important transitional measure in relation to contracts of sale that have been or will be entered into between 2 December 2008 and 1 December 2009, where the transfer of land will not occur until after the commencement date of the legislation. The transitional measure will allow the purchaser to deduct an amount equal to the GAIC liability from the purchase price payable to the vendor.
All clients who have already entered into or contracts of sale of land in the growth areas on or after 1 December 2008, or who are considering entering into contracts in the near future should carefully consider the impact of the transitional measures on their transactions.
Click here to read the Pitcher Partners Tax Bulletin containing further information on this topic.