An Australian Competition and Consumer Commission investigation into advertising claims made by a Townsville new home builder has resulted in Tropical Homes (Townsville) Pty Ltd giving a court-enforceable undertaking.
"During a recent promotion, Tropical Homes placed two newspaper advertisements in Townsville under the theme of beating the GST," ACCC Chairman, Professor Allan Fels, said today. "The advertisements made representations to the effect that the prices of new homes and land were due to increase by up to 15% as a result of the imposition of the GST or that it had been predicted to have that effect.
"But the ACCC and many industry bodies are of the view that the 10% tax, together with reductions in Wholesale Sales Tax, will result in increases in the price of new homes and land by less than 10%".
The ACCC believed the representations made by Tropical Homes were likely to mislead consumers about the true effect of the GST and the New Tax System changes. The ACCC was concerned that in making the representations, Tropical Homes may have breached the Trade Practices Act 1974.
Tropical Homes has acknowledged that industry sources had estimated the effect of the GST to be below 10% and now agrees with that view. As such, Tropical Homes has provided the ACCC with court enforceable undertakings that it will:
- not make the representations of concern in the future; publish a corrective advertisement apologising for their representations; and
- implement a trade practices compliance program to ensure advertising won't mislead consumers in the future.
"This investigation demonstrates the ACCC's position with respect to representations about the effect of the GST. All businesses should be certain about the advertising claims they make and have the facts to back it up. The ACCC will be vigilant in the transition from the old to the new tax system to make sure consumers are being given the right information by businesses and not being misled.
"The matter also shows that the ACCC will be making sure that consumers aren't misled about the GST whether they are in a major city, Townsville or any other location throughout Australia.
"The ACCC has however welcomed the undertakings provided by Tropical Homes as an effective and timely way to resolve matters".
More information about the ACCC's role in GST representations can be found in the ACCC handout titled Pricing Claims and the New Tax System.
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