Draft Legislation - Post 1 July 2018 Purchasers of Residential Property to Remit GST on Behalf of Developers
The Government has released exposure draft legislation requiring purchasers of new residential premises (or subdivisions) to pay the GST on the purchase price directly to the ATO as part of the settlement. http://www.treasury.gov.au/consultation/c2017-t220266. Currently, GST is included in the purchase price and it is the developer that remits any GST in their BAS returns.
The Draft Bill proposes:
-To amend the GST Act to require the purchaser of new residential premises, or a new subdivision of residential land, to make a payment of 1/11th of the purchase price direct to the ATO, prior to or at the time of settlement.
-Suppliers of residential premises or potential residential land will be required to provide the purchaser with a notification 14 days before making the supply.
-The Developer entity or GST registered entity that makes a taxable supply of new residential premises (or a potential new subdivision) will be entitled to a credit for the amount of the payment made to the ATO.
-The Developer entity or GST registered entity that makes the taxable supply will be required to remit the GST to the ATO after lodging their BAS, taking into account any credit available for the payment made by the purchaser.
-Where a developer entity makes a taxable supply of new residential premises under the margin scheme, the entity will be able to apply to the ATO for a refund of a portion of the amount withheld by the purchaser.
-The proposed rules apply equally to residential land and or premises as they do to ‘potential residential land’
-The proposed Legislation refers to ‘Potential Residential Land’ as follows:
This subsection applies to a supply of:
(a) *new residential premises; or
(b) *potential residential land that:
(i) is included in a *property subdivision plan; and
(ii) has not previously been sold as potential residential land included in the property subdivision plan;
- Supplies of new subdivisions of potential residential land between members of a GST group or participants in a joint venture will be specifically excluded to prevent the interposition of certain structures to deliberately avoid the withholding obligation arising on the supply to the end user.
DATE OF EFFECT: Withholding by purchasers will apply to supplies of new residential premises or subdivisions for which consideration is first provided for on or after 1 July 2018 (subject to a 2-year transitional period for pre-1 July 2018 contracts). Transitional arrangements propose to "waterfall" payments in relation to existing pre-1 July 2018 property development arrangements.
SUBMISSIONS are due by 20 November 2017.
For further information contact Noé at email@example.com or call +61 7 3221 9444.
Disclaimer: The contents herein are intended for general information only and should not be construed as legal or accounting advice. Vicca Chartered Accountants Brisbane bears no responsibility for any loss that might occur from reliance on information contained in this publication. Please do not reproduce, transmit or distribute the contents herein in any form without prior permission from Vicca Chartered Accountants, Taxation Accountants Brisbane Australia.
Vicca Chartered Accountants: Professional, Practical, Commercial.Experience the Difference™