Legislation has been introduced to address integrity concerns in connection with the property industry.
Under the amendments proposed in the Bill, purchasers of new residential dwellings or newly subdivided land will be required to pay a GST amount directly to the Australian Tax Office (ATO) as part of the settlement process of the property.
The Government and ATO have been concerned that some property developers have been selling properties for a purchase price that reflects their GST obligations but have then taken steps to dissolve their business before the next BAS lodgement to avoid remitting the GST.
The new rules will apply in relation to supplies for which any of the consideration is first provided (other than consideration provided solely as a deposit) on or after 1 July 2018.
Currently, supplies of new residential premises are generally subject to GST and the supplier remits the GST to the ATO in their next BAS, which can be up to three months after the date of settlement.
Under the new rules purchasers will be required to pay the GST amount as soon as the transaction occurs. The GST amount will simply be 1/11th of the full sale price, regardless of whether the vendor is eligible to apply the margin scheme to reduce the GST liability associated with the transaction. In these cases the vendor will receive a credit for the amount that has been paid by the purchaser and may apply to the ATO for a refund of any excess GST component.
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