GST Withholding at Settlement – Changes effective 1 July 2018 Affecting Certain Property Transactions
From 1 July 2018, purchasers of new residential premises or subdivisions of potential residential land will need to pay the GST component of the purchase price directly to the ATO as a part of the settlement process.
This does not affect the sales of existing residential properties or the sales of new or existing commercial properties.
For property transactions, purchasers will need to:
- split the amount of GST from the total purchase price
- pay the GST component directly to the ATO by a disbursement at settlement
- pay the GST exclusive purchase price to the property developer (vendor).
Settlements will not be conditional on the payment of GST to the ATO.
Vendors will need to give written notification to the purchasers when they need to withhold.
The liability for the GST remains with the vendor, and there are no changes to how vendors lodge their business activity statements.
See also: ato.gov.au/gstatsettlement
In mid-June the Law Society of Tasmania will run seminars in Hobart, Launceston and Devonport (also by videolink to other areas of the north-west; enquiries: firstname.lastname@example.org).
These sessions will provide details about the new GST at settlement measure; explain the transitional arrangements that have been put in place, including timeframes; explain the withholding obligations for purchasers and notification obligations for developers, and go through the forms that will need to be used and other key processes. The flow on of withholding credits to the developer will also be covered.
Seminar dates – coming soon.
The ATO has prepared a draft Law Companion Ruling (LCR) for the GST at settlement measure that is now open for public consultation. Some questions already received by industry have been incorporated into the LCR, but we would like your further feedback and comments by 25 May 2018. Details on how to provide feedback are towards the end of the LCR.