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Is your apartment building in Canberra affected by the GST class action?

Is your apartment building in Canberra affected by the GST class action?

31 October 2016 Katie Burgess

There are different developments dotted right across Canberra, but those who bought into them could have something in common - they might be owed tens of thousands of dollars. 

A class action is being mounted against the developers of at least 13 apartment buildings across Canberra for the refund of GST incorrectly charged as part of the purchase price on new residential units. 

According to IMF Bentham, a litigation funder which has investigated the problem alongside law firm Corrs Chambers Westgarth, some developers charged buyers GST-inclusive prices despite advice from the Australian Tax Office that the properties should have been input taxed because of a loophole in the legislation.

The advice related to an obscure ruling from 2010 when the Federal Court found that units constructed on land subject to a long-term lease were not considered "new residences" under the law and therefore should not be subject to GST.

As all land in the ACT is leasehold, developers of Canberra unit blocks would buy the lease to the land then split the lease into the unit title for each new owner.

However, because the lease had previously been held by the developer, the premises the owners purchased weren't considered "new" and should not have been subject to GST, according to the Federal Court.

The loophole was closed in 2012 but still applied to developments that were commercially committed before January 27, 2011.

Thousands of Canberrans who bought into developments in Belconnen, Braddon, Bruce, Civic, Kingston, Lyneham, Phillip and Tuggeranong in the past six years could be affected by the suit, which could recoup million of dollars, IMF Bentham said.

IMF Bentham investment manager Oliver Gayner told Fairfax Media as many as 30 Canberra developments could be affected by the action. 

Currently, there are 13 developments listed on the IMF Bentham GST class action website, but Mr. Gayner said investigations are continuing and more could be added to that list. 

Axis in Lyneham, Altitude in Belconnen, Arte in Braddon, Avoca in Phillip, Kingston Place and Lakefront in Kingston, Mayfair and Manhattan on the Park in Civic, Oracle in Belconnen, Vantage and Verge in Bruce, Vue in Greenway and Wilara in Phillip are those which have been so far named. 

Fairfax Media has reached out to the developers of the 13 buildings implicated in the potential class action.

A spokeswoman for Geocon, whose apartment complex Vue is listed, said the company was "confident they had acted appropriately with the contract of sale at the time of this development". 

Amalgamated Property Group, John Russell, Morris Property Group and Hindmarsh did not return calls on Wednesday. 

 

Source: canberratimes.com.au

Date: September 22 2016