From 1 July 2018, there’s a change in legislation which is aimed at property developers who fail to remit their GST liability
From this date the purchasers of new residential premises or potential residential land are required to withhold an amount of the contract price and pay this directly to the ATO as part of the settlement process. The amount of GST will not change.
The new legislation does not affect the sales of existing residential properties or the sales of new or existing commercial properties.
For applicable new residential property transactions, purchasers will need to:
- split the amount of GST (1/11th) 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).
Property developers will need to give written notification to the purchasers when they need to withhold. The liability for the GST remains with the property developer, and there are no changes to how property developers lodge their business activity statements.