According to ATO, they are changing the way they 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 ATO on or before settlement.
There are transitional rules that apply to some contracts.
How the change may affect HTA clients
If you are a property developer, you need to let the buyer know when you sell residential premises or potential residential land if the the buyer needs to withhold an amount. HTA client can include this information in the sale contract or in a separate document.
If the buyer needs to withhold an amount, you must also include the details listed below:
- your name and Australian Business Number
- the amount the buyer needs to withhold and pay to ATO
- 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.
You don't need to tell the buyer if you 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, ATO will make a credit available to HTA client in a GST property credit account and send you an email to confirm this. ATO will apply this credit against your activity statement account once you lodge your business activity statement (BAS).
There are no changes to the GST rate or the way HTA client lodges their BAS.
If you have questions, don't hesitate to contact us.