There have recently been changes to legislation, which now places a responsibility on the buyer to withhold the GST amount from the contract price and pay the GST directly to the Australian Taxation Office (ATO).
These changes affect transactions that involve new residential premises or potential residential land, and in some cases, long term leases (50 years of more) – where the sale or transfer of the property is a taxable supply. All transactions that settle on or after 1 July 2018 are impacted by the change.
The seller must provide notice to the buyer before settlement, notifying them whether the GST Withholding applies to the transaction, the amount of GST required to be withheld at settlement and details of the entity registered for GST. The buyer or the buyer’s solicitor must lodge the appropriate forms with the ATO before settlement and supply a copy to the Seller.
Buyers and sellers should speak to their financial adviser and solicitor if they believe these new laws apply to their transaction. Please note the definition of “potential residential land” is very wide.
Penalties can be imposed on a buyer who does not withhold and forward to the ATO the GST component of the contract price. To prevent these penalties, all parties involved in these types of transactions will need to be diligent from 1 July 2018 to ensure that all GST monies are retained and on forwarded correctly to the ATO.
Call Sempre Vero Lawyers to discuss whether these amendments affect your property purchase.