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 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)
Just a reminder that GST is now a query of every Residential contract dated on & post 1/7/18.
Not just the obvious ‘new land or new builds’, since ‘New Residential Premises’ under the Taxation administration act, may still be quite aged properties!
“The term ‘new residential premises’ is defined in s 40-75 of the GST Act:
Residential premises are new residential premises if they:
a. have not previously been sold as residential premises and have not previously been the subject of a long-term lease; or
b. have been created through substantial renovations of a building; or
c. have been built, or contain a building that has been built, to replace demolished premises on the same land.”
The AICWA have created a ‘Seller’s Notice to Buyer’ seems to be more direct about if GST is applicable or not?
Either way this new ruling is not well known, nor tested so watch this space as it is likely to develop further as time goes on.
On or after 1 July 2018, certain purchasers of new residential premises or potential residential land will be required to withhold an amount from the price of the supply for payment to us.
Note: When we refer to purchasers we are also referring to lessees under long-term leases.
The withholding amount is due on or before the day that consideration for the supply (other than a deposit) is first provided. If the contract is an instalment contract that will be the day the first instalment is paid otherwise it will be the day of settlement.
Suppliers will be required to assist their purchasers to comply by notifying them whether or not they have a withholding obligation on supplies of certain kinds of residential premises and potential residential land. Where there is a withholding obligation, the supplier must notify the purchaser of the amount they must withhold, when they must pay it to us, and of certain other particulars.
The amount a purchaser must withhold and pay to us is generally either:
1/11th of the contract price (for fully taxable supplies)
7% of the contract price (for margin scheme supplies), or
10% of GST exclusive market value of the supply (for supplies between associates for consideration less than GST inclusive market value).
Purchasers do not need to register for GST just because they have a withholding requirement.
Transitional arrangements apply to contracts entered into before 1 July 2018.
Find out about:
Transitional arrangements for property contracts entered into before 1 July 2018
How the measure will work from 1 July 2018
When the contract doesn’t settle
No additional payment on top of the agreed purchase price
Information for suppliers and their representatives
Information for purchasers and their representatives
Video: GST withholding for certain taxable sales of property (External Link)
ATO podcast – Tax inVoice – Episode 4 – GST at settlement
GST at settlement webinar (External Link)
Authorised by the Australian Government, Canberra
The GST withholding obligation was announced in the May 2017 Federal Budget.
It is directed at non-compliance by property suppliers who sell properties for a price that includes the GST but who avoid remitting the GST by dissolving their businesses before their next BAS lodgment. This is a form of phoenixing.
The Treasury Laws Amendment (2018 Measures No. 1) Bill 2018 was passed on 29 March. Under Schedule 5 of the Bill, purchasers of real estate may be required to withhold GST on the purchase price of new residential premises and new residential subdivisions and remit the GST directly to the ATO on settlement.
How will you manage change in 2018?
Are you ready for:
What will the rest of 2018 serve up to conveyancers?
Don’t get left behind!
AICWA is proud to have partnered with sponsors and key industry stakeholders to deliver a broad calendar of training events. We are committed to assisting you by delivering quality training outcomes as well as providing regular updates. As the peak industry body representing conveyancers locally and nationally, our access to key industry stakeholders means we are best positioned to deliver the knowledge you need.
Source: 9th February AICWA Education e-Newsletter
The GST on property transactions measure has been introduced, as schedule 5 to the Treasury Laws Amendment (2018 Measures No. 1) Bill 2018.
The Government will strengthen compliance with the Goods & Service Tax (GST) law by requiring purchasers of newly constructed residential properties or new subdivisions to remit the GST directly to the Australian Taxation Office (ATO) as part of settlement. The measure will require the purchaser of newly constructed residential properties of new subdivisions to remit the GST on the purchase price directly to the ATO as part of Settlement for contracts on or after July 1, 2018.
You can access the legislation as introduced along with the explanatory materials by following this link HERE.
Makes me laugh that "the Federal Government will strengthen compliance" BY MAKING OTHER PEOPLE DO THEIR JOB!!!! Yet another coming tax trap for buyers of new properties. GST Withholding.
From 1 July 2018, the Federal Government will strengthen compliance with the Goods & Service Tax (GST) law by requiring purchasers of newly constructed residential properties or new subdivisions to remit the GST directly to the Australian Taxation Office (ATO) as part of settlement. Under the current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs.
The measure will require the purchaser of newly constructed residential properties of new subdivisions to remit the GST on the purchase price directly to the ATO as part of Settlement for contracts on or after July 1, 2018.
Landlords lose thousands in tax savings in new bill
It's no surprise therefore, that a bill slipped through unobtrusively on November 15 when the nation was focussed on the result of the same-sex marriage survey. However, many Australians who have bought a rental property this year or are thinking of buying a rental property will be affected by this change.
New Commonwealth Government legislation came into effect on 1 July 2017 requiring more information to be provided to the Australian Taxation Office (ATO) when ownership of a property changes. This applies to all buyers and sellers across Australia. The requirements are a COAG initiative to enable the ATO to develop consistent and comparable datasets in the national database, which will reduce tax error and increase tax compliance.
Every state and territory is implementing the data collection in accordance with individual state legislation. In Western Australia this initiative has been led by Landgate, supported by the Office of State Revenue.
Keep me updated, join us here...