ATO Property Update For GST
Some important news for those transacting property this year as 1 July 2018 will mark the introduction of a significant new set of rules that will apply to the purchase of new residential premises, new residential subdivisions and long term leases for a period of 50 years or more.
From the 1st of July 2018 anyone who purchases new residential premises that have never been lived in, or vacant land which is for the construction of residential property, or a long term lease, if the purchaser is not registered for GST then at settlement of the transaction, the purchaser must withhold the GST element of the Purchase Price and pay it to the ATO on behalf of the Seller.
Purchaser GST Registration
If the purchaser of the vacant land or new residential property is registered for GST themselves, this does not apply but if they are not registered (and this will be the case for most purchasers) than the amount of GST that they will be required to hold back and pass onto the ATO will depend on whether the Seller is using the Margin Scheme. It will be the responsibility of the Seller to notify the Purchaser prior to settlement whether they are using the Margin Scheme or not. It will be the purchaser’s responsibility and obligation to send the payment to the ATO. The Seller will be required to provide details in their regular BAS statement and if appropriate will receive a credit for the GST paid by the Purchaser.
There is a transition arrangement for these new requirements. If a Contract is signed on or after the 1st of July 2018 with settlement to take place after that date then the new rules will apply. If a Contract of Sale is signed before the 1st of July 2018 and the payment is made before the 1st of July 2020 then these new rules do not apply but if a Contract was signed before the 1st of July 2018 and the payment is made after the 1st of July 2020 then these new rules will apply.
For any advice or assistance in relation to this or any other property related matters, please do not hesitate to contact us at Aylward Game Solicitors.