According to the current law, the property developer collects the GST (as part of the payment) from the property buyer and pays it to the ATO. This payment method is consistent with other industries.
However, The ATO is changing the way of collecting 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 the ATO on or before settlement.
How the change may affect the buyers and property developers?
For property developers:
You need to let the buyer know when you sell residential premises or potential residential land if the buyer needs to withhold an amount. You can include this information in the sale contract or in a separate document.
Please note that, you don’t have to tell the buyer if you are selling: commercial residential premises or potential residential land where the buyer is a GST – registered business purchasing the property for a creditable purpose.
If you need to withhold an amount, you must also include the details listed below:
- your name and Australian Business Number
- the amount you need to withhold and pay to the ATO
- when you need 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.
There are no changes to the GST rate or the way you normally lodge the BAS.