From 1 July 2018, 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. However, care will need to be taken that this is declared properly on each contract. The REIQ is amending its contract.
This does not affect the sales of existing residential properties or the sales of new or existing commercial properties.
For property transactions, purchasers will need to:
- split the amount of GST from the total purchase price
- pay the GST component directly to us 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. However, there are significant penalties for both the buyer and the seller for unpaid GST.
Please call us if you would like more information.