• Service: Tax, Indirect Tax
  • Type: Regulatory update
  • Date: 21/10/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Kate Law

Kate Law
Partner, Indirect Tax

+61 8 9263 7303

GST clause void for uncertainty 

by Kate Law, Indirect Tax Specialist

A recent goods and services tax (GST) case highlighted the importance of ensuring that GST clauses are clear and operate as intended. The case of Cityrose Trading Pty Ltd v Booth & Anor [2013] VSC 504 concerned whether a GST clause operated to allow the vendor to recover an additional amount on account of GST.

The Victorian Supreme Court held that the vendor was not entitled to recover the GST as the GST clause was void due to uncertainty. The GST clause was uncertain as the drafter confused the concepts of 'consideration' and 'value of taxable supply' as defined in the GST Act.


The clause in question stated that the consideration payable under the contract represented the 'value of the taxable supply'. The court agreed with the views expressed in the first instance Tribunal decision that the clause was worded in a way that made it ambiguous as to whether the purchase price was inclusive or exclusive of GST.


This resulted in the vendor not being entitled to gross up the payment to account for a GST liability.


The case underscores the importance of drafting GST clauses in a sufficiently clear manner to reflect the intention of the parties and avoid disputes.


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