The Treasury Laws Amendment (2018 Measures No 1) Bill 2018 was introduced in the House of Reps yesterday. The bill relates to the payment of GST on taxable supplies of certain real property. Please see below a summary of the measures and the changes resulting from the practical concerns raised following the release of the Draft bill.
|Date of Effect||Withholding commences 1 July 2018|
The bill applies to certain supplies of real property for which any consideration is first provided on or after 1 July 2018
|Transitional period||There is a 2-year transition window for contracts executed before 1 July 2018 and which settle before 1 July 2020. After that date, withholding applies to all residential sales.|
|Withholding amount||The withholding amount is 1/11th of the Contract Price for fully taxable sales.|
This is reduced to 7% for margin scheme sales. Settlement adjustments are ignored and the withholding is based on the stated Contract Price only.
|Remitting GST||Purchasers will have 2 options in relation to the withheld GST:|
1. they can remit it to the ATO on or before settlement;
2. they can give the vendor a bank cheque on settlement (made out to the Commissioner).
|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.|
Please contact our office to discuss these measures and the practical implication of this on your business.
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