Buying or Selling Your House?
You may be affected by the new GST Withholding Regime.
If you are planning to buy or sell residential property after 1 July 2018 then you should be aware of some recent changes to the way in which the Australian Taxation Office collects GST from property transactions.
Under the new legislation, purchasers of ‘new residential premises’ or ‘potential residential land’ must remit the GST component of the purchase price directly to the Australian Taxation Office at the time of settlement.
Although the seller of the property still remains liable for payment of the GST, any buyer who fails to withhold the applicable GST amount (and pay same to the ATO at settlement) will have committed an offence.
Sellers must also be vigilant, as they are now required to provide additional disclosure in the sale contract or give a ‘Notice to Withhold’ at least 14 days prior to settlement. This ‘Notice to Withhold’ must include certain information, such as the GST amount and payment date. Failure to provide an appropriate notice is an offence under the legislation.
The regime defines ‘new’ residential premises as being premises which have not previously been sold as residential premises or which have been created by substantial renovations, and is therefore capable of applying to buildings which might not otherwise be thought of as ‘new’.
There are numerous other types of property transactions which may be captured under the new GST withholding regime, including the sale of vacant land and off-the-plan developments.
If you are a developer, buyer or seller of residential property, we recommend you contact our Commercial & Property Law team to discuss your potential obligations under the new GST withholding regime.
Please do not hesitate to contact our office on (07) 4963 2000 or via our online contact form.