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.
New GST withholding is expected to now occur at the Autumn sitting, between February 5th and 8th and will be passed within that sitting period by at the latest the end of March. Once introduced the Explanatory Memorandum will be available and the implementation phase will be underway.
The ATO have commenced preparation despite the delay in passing the law, and have started to draft forms along with the process required of conveyancers.
An example of the DRAFT online notification form can be viewed HERE
What you need to know
The process at this stage will entail:
As with all aspects of quoting your "fee for service" it is a requirement for you to disclose your fees upfront making every effort to ensure your client understands the various costs and how they may apply. Whether you are assisting with facilitating Capital Gains Tax (CGT) for foreign residents or the proposed GST withholding you can determine your fee based on recouping reasonable costs.
Source: 24th January AICWA e-Newsletter.
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