New legislation is coming into effect on 1 July 2018 whereby a purchaser of a new residential premises or land in a new subdivision will be required to retain the GST on the sale and pay it directly to the ATO as part of the settlement process. This will apply to all sales that exchange after 30 June 2018. The amount to be retained will either by 1/11 of the market value of the supply, or 7% of sale proceeds if a sale is on the margin scheme.
Solicitors and conveyancers will be aware of this as it is a part the conveyance process. It is our recommendation that the contract for sale should detail the amount to be withheld (as a percentage) and that such amount should be provided for as a bank cheque at settlement, payable direct to the ATO at that time. The vendor should provide ATO payment details to ensure the correct treatment thereof.
Developers will need to start considering cash flow issues as they will no longer have the benefit of receiving the GST component in cash during the period between settlement and remitting this amount to the ATO through the lodgment of their BAS.
If you need any additional information regarding this process, please contact our office on 02 6652 2333.
– Posted 29.6.18
This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.