Some supplies that were previously GST-free under long-term non-reviewable contracts became taxable on 1 July 2005. The parties to long-term non-reviewable contracts may revise the contract price to take account of the supplies becoming taxable.
Where a supplier and recipient cannot mutually agree on a revised price, the supplier may start an independent arbitration process to work out an appropriate revision to the contract price.
|
If the recipient does not accept the arbitrated price, the recipient, rather than the supplier, will be liable to pay the GST.
|
Yes, a supplier may restart the arbitration process by making a new offer. A supplier may do this if, for example, the supplier wishes to give the recipient more time to consider an initial offer, or if there is not enough time for the arbitration process to be completed.
The 28 day period starts the day after the end of the offer period specified in the supplier's written initial offer to the recipient. The start of the 28 day period is not affected by when the recipient rejects the supplier's initial offer or when the arbitrator appoints the assessor.
Example
On 3 May 2005, a supplier makes a written initial offer to the recipient to revise their contract price, stating that the offer remains open until 31 May 2005.
On 29 May, the recipient writes to the supplier to reject the offer. Upon receiving the written rejection, the supplier applies to an arbitrator for the appointment of an assessor to determine an appropriate price revision. The arbitrator appoints an assessor on 4 June 2005.
The 28 day period for the assessor to determine the appropriate price revision starts on 1 June 2005, the day after the end of the specified initial offer period (31 May 2005). The assessor has until 28 June 2005 to make the determination.
No, and the supplier cannot make a final arbitrated offer to the recipient without a valid determination. However, the supplier may make a new initial offer to the recipient to restart the arbitration process, and thus allowing the assessor another 28 days to make the determination.
No, but the supplier may make a new initial offer to the recipient to restart the arbitration process.
GST law does not make the determination binding on either the supplier or the recipient. However, if the supplier uses the assessor's determination to make a final arbitrated offer and the recipient fails to accept that offer, the recipient becomes liable to pay the GST on the taxable supply rather than the supplier.
No, the Tax Office has no involvement in the arbitration process. If you have any questions about how to apply to an arbitrator or the costs involved, you should contact the arbitrator bodies, as listed in our fact sheet GST and long-term non-reviewable contracts (NAT 12997).
No. However, if either the supplier or the recipient is required to pay GST, the payment must be made by the due date and reported using an activity statement. Unregistered recipients liable to pay the GST must first apply for a GST remittance number.
Records of negotiations and the arbitration process that are relevant to the GST outcomes must be kept for at least five years after the completion of the relevant transactions.
|
For more information about GST and long-term non-reviewable contracts, refer to:
For a copy of our publications or for other information:
- visit our website at www.ato.gov.au
- phone 13 28 66, or
- write to us at
If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.
If you have a hearing or speech impairment and have access to appropriate TTY or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.
|
Last Modified: Monday, 5 March 2012