Are you buying or selling new residential property or land?
Make sure you are aware of the new GST requirements to avoid unintended consequences.
Currently some developers are making taxable sales of residential property & land and are failing to pay the GST collected from purchasers to the tax office.
From 1 July 2018, purchasers of some new residential premises or potential residential land will be required to withhold an amount from the price for the supply and pay that amount to the tax office on or before settlement.
To provide certainty to purchasers, a seller of residential premises or potential residential land must notify in writing whether a purchaser is required to withhold an amount and if so what amount. This withheld amount is not an additional payment on top of the agreed contract price but is taken from the price the purchaser has agreed to pay the seller.
The amended legislation includes a transitional arrangement that excludes sale contracts entered into before 1 July 2018 as long as the property transaction settles before 1 July 2020. This will provide certainty for sale contracts that have already been signed.
These new GST provisions do not change the operation of the sale contract and the transfer of legal title will still occur following settlement of the sale. Importantly the changes do not require the GST amount to be paid to the tax office before a title transfer can be registered with the relevant State or Territory agency.
This is a complex area of legislation and professional advice is essential to ensure that you meet your required obligations. Failing to properly structure sale and purchase contracts may have expensive and unintended consequences. Should you require assistance or have further questions please contact DLA Partners on (07) 3863 9444 or by emailing clientservices@dlapartners.com.au
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This information does not constitute financial or legal advice and is for general information purposes only. Please contact DLA Partners for specific advice relating to your particular circumstances.