Example
In the scenarios above, the sale price is $100,000, and GST is payable. If the standard form contract includes GST, the $100,000 purchase price will be divided into $95,238.10 to the seller and $4,761.90 for GST. In other words, the seller is shorted almost $5,000. If the correct contract is used (purchase price plus GST), it is written up as $100,000 plus GST equals $105,000, and the seller receives their full purchase price.
The standard listing agreement says you don't advise on GST, but that may not protect you if you use the wrong contract...
In anything other than an absolutely standard deal, the best practice for you is to confirm with your client, in writing, that they need to get GST advice. If they won't, you go the extra mile and consult an accountant or lawyer who specializes in GST. These actions don't prevent a seller from suing you, but they will definitely put you in a way better position.
Protect yourself.
Cheers,
Barry
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