Selling Domains Without GST

[Chris.C]

I'm in the process of selling a domain for high $X,XXX and the buyer has argued "that GST should not apply and has in my experience purchasing .com.au domains"...

This is the complete opposite of my experience.

Are there any circumstances under which GST doesn't apply if I'm registered for GST?

 

[pacifier]

I believe the only case in which you can avoid applying GST is if the buyer is an overseas entity in which case the deal will be considered export. I'd suggest to ask the buyer on what grounds they believe GST is not applicable and then confirm with ATO. Of course, if you don't want to lose the deal you can still sell for the agreed price inclusive of GST and pay the GST out of that amount.

Hope this helps.

 

[neddy]

I'm in the process of selling a domain for high $X,XXX and the buyer has argued "that GST should not apply and has in my experience purchasing .com.au domains"...

Chris, it may help to refer them to an authority site e.g. Netfleet. They are by far the largest seller of domains in Australia.

And this is from their terms and conditions (bolding is mine):

"I hereby acknowledge that the Seller may or may not be registered for GST, and the final winning bid on the auction plus the Buyers Premium may incur GST, which is indicated on the listing for the domain. All expired domains on Netfleet, are sold by Netfleet, and thus always incur GST".

Of course, if you don't want to lose the deal you can still sell for the agreed price inclusive of GST and pay the GST out of that amount.

Good point. If you're getting high 4 figures, I'm sure you have a bit of margin to play with. The risk in arguing with the potential buyer is that he tells you to go shove your domain where the sun doesn't shine.

 

[helloworld]

He is probably a personal buyer. Try split the difference if it means a sale. That is anycase, what I would do.

 

[Ashman]

The law in Australia is clear in this respect: prices should always be quoted including GST. As the Australian Competition & Consumer Commission explains:

When you present prices to your customers, you must state the total price of the good or service as a single figure, which is the minimum total cost that is able to be calculated. This should include any GST, COR, domain registration, or other additional charges. If you promote a price that is only part of the total price, the total price must also be displayed at least as prominently as the part price.

If a seller is quoting a GST exclusive price, it may be trying to attract overseas buyers (who won’t have to pay GST) or business customers (who do have to pay the GST but can offset those costs against their own GST charges). However, that doesn’t make the approach legal.

A better approach, both legally and in terms of customer satisfaction is to quote the full price and then subtract GST at the checkout if the customer is in a location where GST would not apply.

 

[Shane]

The only scenario I can think of where no GST would be charged (aside from the seller not being GST registered) is where the domain is being sold as part of a going concern.

But being a domain-only transaction this would not be the case.

The law in Australia is clear in this respect: prices should always be quoted including GST.

There's a difference between quoting a price and negotiating a price.

All of the negotiated contracts that I have in my business (office leases, HR contracts etc) are always done ex-GST.

If Chris has negotiated a price on a domain there is no law that says the negotiated figure should have included GST.

 

[Ashman]

There's a difference between quoting a price and negotiating a price.

I think this is a matter of semantics.

The best way IMO both legally and in terms of customer satisfaction is to quote the full price from the outset, inclusive of all additional costs regardless if the buyer or seller is ignorant of the law.

 

[findtim]

i was of the understanding that if your business turnover was under $75K then you were not allowed to charge GST.

so i would say then that the price you want to sell the domain for is THE price, eg: instead of it being $10K + $1k of gst which can be claimed then you just simply charge $10k.

my thoughts are you stated a price with out detailing there was no gst involved, thus the potential customer put it inot their head they would end up with a gst claim so NOW they are thinking they are now paying more then they expected/agreed to.

years ago i did alot of non gst and always made a point of stating it upfront and making sure it was in a prime position on the invoice. ( but even then i still had problems )

tim

 

[pacifier]

i was of the understanding that if your business turnover was under $75K then you were not allowed to charge GST.

This is not correct. If your annual turnover is over $75k you must register for GST. However if it is below that threshold you can still chose to be registered for GST but you are not under the obligation to do so.

 

[findtim]

This is not correct. If your annual turnover is over $75k you must register for GST. However if it is below that threshold you can still chose to be registered for GST but you are not under the obligation to do so.

yes sorry, i didn't word it correctly, the business needs to decide whether to be GST or NGR if under $75k

also the business can be NGR but must/should change to GST once they believe they will go over $75K turnover , this may happen at anytime during the year but GST is not backdated to prior invoices during that financial year.

best thing to do is tell your account where you are at and let them advise you.

tim

 

[johno69]

yes sorry, i didn't word it correctly, the business needs to decide whether to be GST or NGR if under $75k

You not wording it correctly gave a totally different answer. A bit like then and than

Apple require you to be registered for GST to sell in their App Store. There are only a low % that make over 75k a year from that.

 

[neddy]

This should help as it is from the horses mouth:

When to charge GST (and when not to)

And when you've read that; have a look at this:

Requirements of tax invoices

In either of the sale examples, it shows that you can structure your tax invoice how you want. Bolding is mine.

the GST amount (if any) payable in relation to the sale - this can be shown separately or, if the GST to be paid is exactly one-eleventh of the total price, as a statement such as 'Total price includes GST'

 

[James]

He/She has probably just purchased domains from sole traders in the past who are not registered for GST.

I would just point them to the ATO/ Government website showing why you need to charge GST.

 

[snoopy]

He/She has probably just purchased domains from sole traders in the past who are not registered for GST.

I think this is the likely situation. I usually mention that they can claim back the GST component if they are registered for GST.

 

[Chris.C]

Thanks everyone for your feedback. I appreciate it.