GST at Settlement Update

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GST Update
Review of the GST at settlement measure
Now that the GST measure has been operating for 6 weeks the ATO have put together a Process Review Document HERE
ATO invite interested parties to be part of a Webinar: GST at settlement – Process guidance and common questions – Thursday 6 September  2-3pm
This webinar will focus on the GST at settlement process for purchasers and suppliers. We will also cover some of the issues we have identified with forms received so far and the queries received from industry since the measure has come into effect. Register HERE.
ATO administration
ATO have experienced some issues with despatching the three automated emails for the GST measure. This has resulted in some delays in these emails being issued. If you have any queries relating to your transaction please contact us on 13 28 66 (fast code 3, 4)

Key issues identified in filling out the two forms include:

  1. Incorrect supplier details on form 1:
  2. Some vendors are providing incorrect notification to the purchaser on the supplier details to be entered into the form.
  3. The supplier/s is the entity that has the GST liability and will be entitled to the GST property credit.
  4. An example of the issue we are seeing is notifying the supplier as ABC Pty Ltd (which doesn’t have a GST role) whereas it should be The trustee for the ABC Unit Trust.
  5. Incorrect timing of the lodgement of form 2

There have been a number of transactions where the purchaser/representative are incorrectly lodging form 2 before settlement. The purpose of Form 2 is to confirm the settlement date and to add the liability to the purchasers account. Form 2 should be lodged at settlement or as soon as practical thereafter.
GST Question
Q. It is assumed that vacant land that is zoned for agricultural or commercial does not fallen under the GST remittance measure, however land that has a shed on it, that is currently being lived in or can be lived in, will this fall under  potential residential land?
Ans. Can the shed be considered a residence? If so, then it is not potential residential land. LCR 2018/4: 23. The GST Act defines ‘potential residential land’ as ‘land that it is permissible to use for residential purposes, but that does not contain any buildings that are residential premises’.
To work out if the shed is a residence  we would direct the seller and/or their accountant to Goods and Services Tax Ruling GSTR 2012/5 HERE
Q. Can it be assumed that  any piece of vacant land with no buildings is potential residential land and GST should apply if the seller is required to be registered for GST?
Ans. From 1 July 2018 all sellers of residential premises (new or otherwise) and/or potential residential land must include a supplier notification to the purchaser.The onus is on the supplier to inform the purchaser correctly or penalties may apply.

GST: Getting It Right
Are you dealing with real-estate agents or sales reps who do not understand their responsibilities or the clients (vendor) in managing GST notification?  
If you haven’t had a chance to attend either an ATO presentation or AICWA seminar we strongly recommend that real-estate agents and sales reps read Law Companion Ruling 2018/04
Source:5th September 2018 AICWA e-Newsletter

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