New GST Rules: Purchase of New Build Residential Property
From 1 July 2018, if you buy a new build residential property or subdivision of potential residential land, you will be required to withhold an amount representing the GST and remit it to the ATO.
Why the change?
Basically, it boils down to non-compliance by property developers. Prior to 1 July 2018, it was the responsibility of the property developer to remit the GST component of any sale to the ATO. As a result of a high level of non-compliance by property developers, where developers were collecting the GST, dissolving their business and as a result not remitting the required GST to the ATO.
If you’re a seller:
- Determine if what youâ€™re selling is subject to the GST changes.
- Calculate the GST amount applicable on the sale.
- Notify the buyer.
- Calculate and remit any GST to the ATO after taking into account any credit for the amount sent to the buyer.
If you’re the buyer:
- Contact the ATO advising them a contract of sale has been entered into that requires GST withholding.
- Confirm to the ATO settlement has taken place.
- Remit the GST portion of the sale transaction to the ATO.
If you enter into a contract of sale and your unsure whether the changes apply, please contact us in the first instance so that we can discuss your individual situation.
The ATO has advised they will be issuing penalties for non-compliance.