A reduction in consideration can be self-assessed if:
- the reduction is $5,000 or less and the reason for the reduction was not merely to induce or provide a discount for early settlement.
- the reduction is more than $5,000 but less than or equal to the cost to repair damage to, or defects of, the dutiable property identified in an independent report from a licensed building inspector.
- the reduction is equal to the Goods and Services Tax (GST) because it was included in the purchase price, but -
- professional advice provides that GST does not apply to the transaction because it is the supply as a going concern or it relates to the sale of a private residence or
- an ATO ruling provides GST does not apply to the transaction.
Example
After the buyer and seller fully execute a contract for sale, they agree to reduce the consideration payable by $8,000 to cover the amount it will cost to resolve structural defects identified on the building inspection report. The transaction can be self-assessed because this is an approved reason for reducing the consideration.
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