Message from the ATO!

We are changing the way we collect goods and services tax (GST) on some property transactions during the settlement process.

From 1 July 2018, buyers who purchase new residential premises or potential residential land need to withhold an amount from the purchase price and pay it directly to us on or before settlement.

There are transitional rules that apply to some contracts.


How the change may affect your clients


If your client is a property developer, they need to let the buyer know when they sell residential premises or potential residential land if the buyer needs to withhold an amount. Your client can include this information in the sale contract or in a separate document.

If the buyer needs to withhold an amount, your client must also include the details listed below:

  • your client’s name and Australian Business Number
  • the amount the buyer needs to withhold and pay to us
  • when the buyer needs to make the payment
  • if the purchase includes a non-cash payment (such as land swaps), the GST-inclusive market value of that part of the payment
  • other information as stated in the regulations.

Your client doesn’t need to tell the buyer if they are selling:

  • commercial residential premises
  • potential residential land where the buyer is a GST – registered business purchasing the property for a creditable purpose.

Once the buyer has paid the amount, we will make a credit available to your client in a GST property credit account and send you an email to confirm this. We will apply this credit against their activity statement account once they lodge their business activity statement (BAS).

There are no changes to the GST rate or the way your client lodges their BAS.

Written by Chris Charlton | Managing Director
Charltons Chartered Accountants

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