| GST Funding |
| Do you occasionally have very large GST payments that create funding problems? |
As you will appreciate, if lodging GST on a quarterly cash basis, it may be up to four months before you receive a refund of a large input tax credit.
The following solution may assist in financing:-
- The vendor accepts 10/11th of the purchase price in cash at settlement.
- A post dated cheque for the balance of the purchase price is also paid.
- A charge over the assets (refer our separate articles about Retention of Title) are included in the Contract of Sale to provide some security for the balance of the goods.
- The post dated cheque is then presented after the purchaser has received a refund on the input tax credits.
It depends on whether you are the purchaser or the vendor, what level of risk is involved and certainly if you are the vendor it would be worthwhile for a properly drawn legal document to support this transaction. Since the benefit is to the producer, the legal fees for both parties would reasonably be paid by the purchaser.
11th-December-2003 |
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