Class action seeks up to $100 million for wrong GST charges on apartment sales
A class action seeks to claim up to $100 million over allegations that GST was charged wrongfully on the sale of apartments in the ACT.
International litigation funder IMF Bentham, which is working with Corrs Chambers Westgarth, announced the law suit to the ASX on Tuesday.
It has lodged a statement of claim with the Federal Court in NSW alleging Belconnen Lakeview, a company in the Hindmarsh Group, charged and collected GST on the sale of 352 units in Altitude Apartments when no GST was payable, The Australian Financial Review reported.
IMF Bentham has also identified 25 residential developments sold by various developers in the ACT that may fit the same criteria.
"Over 3000 unit owners in the ACT across a range of developments have already sent us their contracts, and in many cases it seems the purchaser was wrongly charged GST," IMF Bentham Sydney investment manager Oliver Gayner was quoted as saying by the AFR.
"We have given Belconnen Lakeview every opportunity to explain the conduct alleged in the statement of claim, and in the absence of any satisfactory explanation we have now determined to put the matter before the Federal Court to decide."
Assuming an average unit price of $450,000 and an average GST claim of around $40,000, as much as $100 million might be outstanding.
The statement of claim says Belconnen Lakeview used its accountant to obtain an ATO private ruling which switched the tax status from 'taxable' to 'input taxed' shortly before sales commenced. But the company did not inform its customers, who continued to be charged GST, according to the claim.
Hindmarsh Group in the ACT did not comment.
The federal government is also worried that some developers have not remitted GST on new apartments.
This year’s federal budget laid out that as of mid-2018, GST on new homes will be collected directly from home-buyers and not from developers.
The new remittance arrangement is expected to add $650 million in GST revenue over four years.