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Purchasing a brand new property?

If you are considering buying a new residential premises or subdivision, as from 1 July 2018, you will be required to withhold an amount from the contract price and pay it directly to the ATO at settlement to cover the GST on the purchase. The changes to GST collection are aimed at preventing unscrupulous developers collecting GST on new properties and dissolving their business prior to remitting the tax to the ATO (a practice generally known as “phoenixing”).

How it works

It should be understood that your legal representative will be able to organise the GST transfer to the ATO. Also, you will not be required to register for GST as is generally required for businesses collecting the tax on their day to day activities.

To provide certainty to purchasers, the developer must notify in writing whether you are required to withhold an amount. If you are, the developer must also notify you what that amount is and when it needs to be paid to the ATO.

Just to give you are bit of peace of mind, the property settlement will not be conditional on the payment of the GST to the ATO.

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