HELD LAWYERS

Est.1991

Property & Commercial Law

Law Matters

March 2014 Newsletter

Welcome
In this months bulletin, we examine: GST changes affecting going concern and farm land
sales; look at new retirement villages disclosure requirements; and the more mundane matter
of benefit owners of units who benefit more from special works now pay more.
If there are topics you would like us to look into, please let us know.
Each bulletin touches on a broad range of topics in an easy to read, practical way. We aim to
give you a brief, but better understanding of current issues as they arise, and food for thought!
We are happy to visit you in 2014 and provide staff or client briefings about a range of topics
or matters of interest to you. Please feel free to contact us in that regard.
We hope to see you (again) soon in person.
Adam Held
Principal

GST proposed changes to treatment of

going concern and farm land sales
On 14 December 2013 the Federal Government
announced it intends to remove the current GST-free
treatment for the sale of going concerns and farm land,
and provide a reverse charge arrangement. The only
time frame given for this change is during 2014.
While no further details have been given it is expected the
changes will be in line with previous recommendations.
Those recommendations included:
GST be payable on the sale of going concerns and
farm land, but the parties will be able to agree for the
purchaser to be responsible for the payment. This is
known as a reverse charge mechanism.
in order for the reverse charge mechanism to be
available: the supply will have to satisfy the test for a going
concern or farm land; and
the purchaser must be registered or required to be

registered for GST.

If these criteria are not met the reverse charge
mechanism will fail and the vendor will be liable for any
GST.
where the reverse charge mechanism is available and
agreed to by the parties it is expected the purchaser
will be entitled to an input tax credit for the GST paid at
the same time as the GST is payable, thereby requiring
no payment.
the test for a going concern will be relaxed so the
supplier will only have to supply substantially all things
necessary for the going concern and a broader range
of supplies may be considered going concerns.
This change will require amendment to contracts
currently used for the sale of going concerns and
farm land. The Law Institute of Victoria is currently
working on a special condition to include in contracts
in anticipation the legislative change is made.

Malvern Office

Carlton Office

Postal Address

Contact Details

Level 1, 180-182
Glenferrie Rd
MalvernVIC3144
(corner Winter St)
Melway59C8

113 Cardigan St
CarltonVIC3053
Melway2BF10

P.O. Box 467

Malvern VIC 3144
W: www.heldlawyers.com

T: 03 9509 0710
M: 0407 548 632
F: 03 9500 0805
E: info@heldlawyers.com

It is not known what the policy of the Victorian State

Revenue Office is to reverse charging of GST and
whether the GST will be added to the contract sum for
duty purposes, but it remains a distinct possibility.

Special fees are charged when unexpected works need

to be undertaken or when the owners corporation incurs
extraordinary expenses, such as those arising from legal
action.

(source: LPLC In Check newsletter 62, March 2014)

In the case of special fees for works that benefit one or

some (but not all) lots, the changes clarify that the fees
must be levied according to the benefit principle. This
simply means that lot owners who will benefit more from
the works should pay more.

Retirement Villages new regulations information

and disclosure
Legal changes due to apply from 1 July 2014 will
help older Victorians better understand their rights and
obligations when choosing a retirement village, and as a
resident.
The Retirement Villages Amendment (Records and
Notices) Regulations 2013 (Vic) and the Retirement
Villages Amendment (Contractual Arrangements)
Regulations 2013 (Vic) have been passed and will come
into effect on 1 July 2014. They will require retirement
village operators to:
provide an information factsheet (in the approved form)
to prospective residents enquiring about the village;
allow prospective residents to inspect particular
documents held by the operator;
provide an expanded pre-contract disclosure statement
(in the approved form) to those intending to sign a
contract;
use standard content and layout in retirement village
contracts to make them easier to understand and
compare. Content will have to include a basic set of
mandatory rights and responsibilities of residents,
managers and owners.
(source: Consumer Affairs Victoria website)

Owners Corporations special levies benefit

principle
Changes to the Owners Corporation Act 2006 (Vic)
clarifying the basis for levying annual and special fees
came into effect from 18 December 2013. The changes
are in response to a recent Victorian Supreme Court
decision and clarify that:

The Victorian Supreme Court found the benefit

principle did not need to be applied in an exact way if it
was not practical to do so. The assessment only needs
to be considered reasonable. In some cases, applying
the benefit principle may not result in a lot owner paying
other than according to their lot liability:
when the work is being funded partly from annual fees
and partly from special fees and the benefits of the work
to certain lots is offset by their having paid higher annual
fees (because of their higher lot liabilities) or
when works being done on certain lots will indirectly
benefit the other lots, e.g. by raising the value of the
entire building or by reducing the possibility of legal
actions against the owners corporation.
(source: Consumer Affairs Victoria website)

Referrals
Should you require non-legal assistance with various
matters, we are happy to provide you with contact details
for a range of service providers, including financial
institutions, accountants, real estate agents, brokers, etc.

Areas of practice
Property Law including conveyancing and leasing
Commercial and Business Law
Banking and Finance Law including mortgages
and guarantees
Wills and Estates Law
Intellectual and Industrial Property Law
Litigation

annual fees are levied only according to lot liability;

special fees are levied according to lot liability, unless
they are for works that benefit one or some (but not all)
lots.

If you would like further details or assistance or to

discuss information contained in this publication or
generally, please do not hesitate to contact us. For
copies of this and other publications, visit our website at
www.heldlawyers.com.

Disclaimer
This publication is intended to provide commentary and general information only. It should not be relied upon as legal advice. It is not intended to be a complete
or definitive statement of the law on the subject matter covered. Further professional advice should be sought before any action is taken in relation to the matters
described in this publication. Persons listed may not be admitted in all jurisdictions.
Liability limited by a scheme approved under Professional Standards Legislation

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