The Treasury Laws Amendment (2018 Measures No 1) Bill 2018 has been introduced with the proposal to amend tax laws that will place the onus on purchasers of new residential premises and new subdivisions of potential residential land to make a GST payment directly to the Australian Tax Office as part of settlement from 1 July 2018.
WHAT SALES DOES THE LEGISLATION APPLY TO?
New residential premises
Under the new arrangements, purchasers will withhold the GST on the purchase price of new residential premises and new residential subdivisions, and remit the GST directly to the Australian Taxation Office (ATO) as part of settlement.
Potential residential land included in a property subdivision plan
For GST purposes this is defined as “land that it is permissible to use for residential purposes, but does not contain any buildings that are residential premises”
Land which contains any building that is in use for a commercial purpose is excluded
This change is designed to counter tax evasion where some developers collect GST from their customers but dissolve their company to avoid paying it to the ATO. Currently, developers may have up to three months to remit GST.
It is expected that the cost impacts on purchasers using conveyancing services are expected to be minor, given this change leverages the existing disbursement process and the use of standard contracts.