BUILDING CONTRACTS

Chronicle (Levin), 7 September 1946, Page 7

BUILDING CONTRACTS

EFFECT OF REMOVAL OF SALES • TAX The removal of saies tax on all buildiug malerials. which took ell'ect as from \u"ust 16, applies to incompleted contracts let bei'ure that date, says a stateuient, from the Kehabilitat um Board. i'hus ex-servicemen who had buxlding contracts let before August 16 are entitled to have the contract price reduced bv the amount of the reduotiou in the saies tax, unless specilic provision to the contrary was made in the contract. rn Taking as its authority the bales Lax Act of 1932-33, the statement quotes extracts from Bection 62 of the Act, which said: "If, after the passing ot this Act, any alteratioli in the law is made (whether by amendment of the Act or by virtue of an Order in Council under Btction 12 hereof) whereby any ^'oods are made liable to or exempt from saies tax or the rate of the saies tax on anv goods is inereased or reduced, every agrecment for tlie sale ot such goods made in New Zealand or elsewliere. 7 whether made before or after Ihe passing of this Act) shaii, unless provision to tlie contrary is made bv the agreement, be deemed to be lnodiiied. with the following provisions, namelv ..." The' statement then quotes_ ihe provision relevant- to the case in point: • 1 Tf Ihe alteration frees the seller from liabiliiy to pay saies tax on sucli goods as aforesa'ul, tlie purchaser may deduct from the agreed ]iricc tlie saies tax that t.he seller would liave paid had tlift alteration not been niade." Other jioints covered by Ihe sedinii

of ihe Act are: (aj Unless there is a contrary provision in the contract, thci person for whom the buildiug is being! done is entitled to a reduction in tlie: contract price by the diirerence betweeui the. amount of the saies tax which tliej contractor would have paid luid the, alteration not iieen made and the, amount of saies tax aetuaily payable l>y; tlie contractor; '(b) if any saies tax has| been incurred before August 16, 19-1(5.! on niaterials used before or after that j date in conncction with the buildiug. tlie contractor is entitled lo this under; his contract; and (c) in respect of ma1 terials on wliicli saies tax has not been ! incurred, the person for whom the; buildiug is bcing erected is entitled toj a reduction in tlie contract pnce by Ihe) amount of saies tax saved by the comj triictor, unless Ihe contract. provides; otherwise. ' Under the Act the contractor isj bound to give a statement in writiug loj his client sliowiug the- diiference iu price as a result of the alteration in the tax.