The New GST Withholding regime commences on 1 July 2018, here below are the key points developers must consider before the 30th June 2018.
The new GST Withholding Regime – 7 things every developer needs to know
|1. Date of Effect ||The GST Withholding regime commences on 1 July 2018 and applies to all contracts entered into after 1 July 2018.|
The new rule applies to the supply of new residential premises or sales of residential land
Supplies of substantially renovated residential premises are excluded from withholding
Supplies of commercial residential premises are excluded from withholding
Supplies to a GST registered purchaser for a creditable purpose are excluded from withholding (i.e. Business to Business transactions)
|3. Transitional period||Contracts entered into before 1 July 2018 and settled before 1 July 2020 are excluded from the withholding regime.|
|4. Withholding amount||The withholding amount is 1/11th of the Contract Price for fully taxable sales.|
If the parties have agreed to apply the margin scheme the withholding amount is7% of the Contract Price.
|5. Remitting GST||Purchasers will have 2 options in relation to the withheld GST:|
a. they can remit it to the ATO on or before settlement;
b. they can give the vendor a bank cheque on settlement (made out to the Commissioner).
|6. Receiving credit for GST Withheld||Developers must declare GST liabilities in their BAS and receive credit for the amount of GST withheld when the BAS is lodged.|
|7. Notice required to purchaser|
|All vendors of residential premises / residential land (including developers, investors and private home owners) will need to provide a notice to the purchaser prior to settlement advising whether GST withholding applies. Failure to do so will be a strict liability offence attracting a fine of $21,000 for individuals and $105,000 for companies.|
Should you have any queries, please contact our office.
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