Monday 27 August 2018 | Property Observer Previous page
New residential property buyers will need to be aware of the change in GST rules in place from the 1st of July 2018 that sees them responsible for the GST payment.
Buyers of new residential property will now be responsible for paying the GST amount to the Australian Tax Office themselves, on or before settlement, instead of by the developer.
The change sees no additional cost to buyers but will mean additional steps in the settlement process for the buyers, including separating the GST from the purchase price and submitting forms to the ATO. The changes are aimed at reducing tax evasion in the property development sector by dealing with the minority who weren’t do the right thing.
The chief executive of the Property Council of Australia, Ken Morrison, said this was one of the biggest changes to the way GST was collected on property since its introduction almost two decades ago.
“Under this change, buyers of new residential properties or subdivision of potential residential land will be responsible for remitting the GST amount to the ATO on or before settlement,” Mr Morrison said.
“Previously, this was done by the developer. The overwhelming majority did the right thing and passed the GST they collected through to the ATO, but this measure has been introduced to deal with the minority who didn’t through so-called 'phoenixing'.”
This could affect up to 70,000 property transactions a year.
“People buying property after 1 July should talk to their solicitor or settlement agent to ensure they have the right arrangements in place to meet this new requirement and ensure a smooth settlement process,” Mr Morrison said.
There are transitional arrangements in place for contracts entered into before 1 July 2018 and which settle before 1 July 2020.
Mr Morrison said Property Council members had been investing in systems and staff training to support the introduction of the new process and to mimimise disruption or inconvenience to their customers.
“We’ll closely monitor the implementation of the change and continue to consult with Government on issues that may arise during the transition.”
The change to GST payment is the biggest of a number of federal and state property- related changes that come into effect on 1 July, you can read about all the relevent Queensland Real Estate changes here.