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June 27, 2009 at 12:38 am #965036Up::0
Good Morning,
I have just received a loan for a mobile food & ice cream Van. I had everything sorted and have been very excited as I was ready to pick up the business, when the owner selling told me I had to pay an extra $9,500 GST. I rung my accountant, he said I did not as it was an ongoing business. BUT long story short, I found out because she’s registered with the ATO office and has a ABN no, yet she has been doing only cash sales (all under the table) the ATO doesn’t have any GST payments or income from her. Therefore it’s as if there is no business…and I do have to pay. My accountant explained this to me. He has only suggested that we can probably get the GST reduced for ‘good will’ of the business. I will talk to him again on monday as he was on his way out when this all went down..i’m just feeling impatient & need to know after all my hard work and hours and hours of planning this isn’t going to end before it even began due to GST!
I have a couple of questions;
1) do I get this GST back? (owner seemed to think I do)
2) I do not have any more cash to pay this GST…is there any grants or way this GST can be put off? (I have no clue)
3) Has anyone been in a similiar situation and what did u do?
4) any other advice???Thanks in advance
SarahRJune 27, 2009 at 1:20 am #1009680Up::0If it was me and this is not advice – believe me, I am no financial wizz kid.
I would reduce my offer by $9500, they have been making tax free income, why should you have to pay for that?
June 27, 2009 at 1:28 am #1009681Up::0Adam Randall, post: 9330 wrote:If it was me and this is not advice – believe me, I am no financial wizz kid.I would reduce my offer by $9500, they have been making tax free income, why should you have to pay for that?
I’ve already put that to them…I actually said it was very unfair I had to pay for her dishonesty. But she refused to budge. She seemed annoyed with me…huh??? how does that work.
June 27, 2009 at 2:53 am #1009682Up::0sarahR, post: 9329 wrote:1) do I get this GST back? (owner seemed to think I do)If you’re GST registered and a it’s a legitimate business cost then I don’t see why you couldn’t claim it (subject to your business being fully taxable ie no GST free sales). Your accountant should be easily able to answer this.
June 27, 2009 at 12:12 pm #1009683Up::0Hi
Answer… you get the $9500 back from ATO so go back to vendor and tell her that she will get her $9500 when ATO pays it to you… if you conclude the deal pre 30 June and lodge your BAS on 1 July you could have the money to give her within 10 days (generally speaking) … be strong on delayed $9500… business buyers to do not come by every day
July 9, 2009 at 5:49 am #1009684Up::0Hi.
This is a very odd situation. You need to find out whether the vendor is registered for GST.
If the vendor is not registered for GST, they cannot charge GST, and they cannot issue a Tax Invoice showing a GST component to the sale price.
If they receive the GST component, there would be no requirement to remit it to the ATO, as they do not need to complete Business activity Statements.
I believe that this would be a sale of a going concern, in which case it is GST-free.
You can check whether the vendor is registered for GST by going to the following website, and searching for the vendor’s ABN number:
http://www.abr.business.gov.auJuly 9, 2009 at 8:29 am #1009685Up::0This would irk me too. I hate it when people advertise a product or service and then later I find out there’s a GST component to be added. I think everyone should advertise their product or service GST inclusive.
In that vein, whatever has taken place here (I admit to being confused) the GST component should have been included in the sale price, if it’s a compulsory item to pay.
July 9, 2009 at 8:41 am #1009686Up::0kathiemt, post: 10102 wrote:I think everyone should advertise their product or service GST inclusive.I disagree with this. If you are making profit with yor business, any GST you pay during the year will be returned (or taken off the GST that you need to pay to governemnt in your BAS return.) Just about any expense in a business gets the GST back.
In relation to the problem at hand…
Why don’t you tell the seller that you will let the ATO know about the problem, and ask them what they think about whether you need to pay GST or not, and whether you can treat the business as an ongoing concern given that the current owner has been dodging tax.
I’m sure they will be very happy to sort it out.
July 9, 2009 at 8:51 am #1009687Up::0But then Tristan what people see advertised in fact becomes a different amount when having to pay for the product or service. I always tell people my fees GST inclusive. I know all the expenses I pay for have GST included and the only business I know that shows it separately is Sensis for Yellow Pages. At least, all the businesses I pay things for.
July 9, 2009 at 9:46 am #1009688Up::0Good point Kathie,
We show our prices as $xxx + GST. Which I guess is the same thing. It is very clearly marked. Do you think that is OK?July 9, 2009 at 10:06 am #1009689Up::0Tristan Boyd, post: 10117 wrote:Good point Kathie,
We show our prices as $xxx + GST. Which I guess is the same thing. It is very clearly marked. Do you think that is OK?Yes, that would be ok. It’s when no-one indicates it and you assume that’s the (total) price and then find out there’s more to pay afterwards which is a pain. Especially with big ticket items.
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