Q: The question is about whether GST applies to a payment made when a commercial lease is terminated. The landlord paid the tenant $15,000 because they needed the space for their expanding business. The payment was meant to cover the cost of the tenant moving out, but there's no paperwork specifying its purpose. If inducements for entering a lease attract GST, does this payment also attract GST?
A: It boils down to whether there's a transaction involving payment, as required by GST law.
‘Consideration’ is defined in the law. So, a payment wouldn't count unless it's linked to a transaction.
‘Supply’ is also defined. Here, the tenant agreed to vacate the premises, which counts as a 'supply'. Since the payment is linked to this, it counts as consideration.
So, if all the requirements are met, GST would apply to this payment, making it taxable.
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