Dear friends and experts in the ATO Community, I would like your assistance to verify the GST regulations regarding the interest charged by a business entity on the sale of goods or services due to the buyer's delayed payment. The questions are as below:
1 What is the legal definition of "Sales Amount" in Australia?
2 Case Studies and Q&A
Company A contracted with Company B for a project and both parties signed an engineering maintenance contract without pre-agreeing on the payment of late interest in the event of delayed payment by Company B. After the project was completed, Company B settled and paid the project fee to Company A based on the actual acceptance quantity. Subsequently, Company B asked Company A to provide engineering maintenance services, and a dispute arose as to whether the maintenance services should be separately priced and paid for. This dispute led to a civil lawsuit, which ultimately resulted in a court judgment that required Company B to pay the engineering maintenance fee and the late interest calculated at the statutory interest rate for delayed payment.
(1)Should the engineering maintenance fees charged by Company A be subject to GST?
(2)Should the delayed payment interest calculated at the statutory interest rate by court judgment on the engineering maintenance fees delayed due to litigation, for which the parties did not agree on the calculation of interest on delayed payment in advance, be subject to GST?
(3)If Company A and Company B do not have a dispute post-payment and both parties agree to calculate late payment interest at the statutory interest rate, should it be subject to GST?
Thank you and I look forward to your favourable response.
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