Purchasers of New Residential Properties to Remit GST at Point of Settlement
- 19 February 2018
From 1 July 2018, purchasers of new residential premises and new subdivisions of residential land will be required to remit GST on the purchase price to the ATO directly on or prior to settlement.
This will replace the current GST on a quarterly or monthly basis in their Business Activity Statements, which can be months after the settlement date. This new arrangement is expected to assist in reducing the delays or failure in remitting the GST on sales for some property developers.
The Exposure Draft Legislation and Explanatory Materials released by the ATO on 6 Novemeber 2017 has shed some light on how this arragement will be applied in practice:
- Property sellers must provide purchasers with a written notice informing them of their obligations to remit the GST at least 14 days prior to settlement;
- Failure to notify purchasers of the obligations will result in various degrees of penalties;
- Sellers' entitlements to claim tax credits will be dependent on buyers remitting the GST.
Credit: Susie Lu