New GST Withholding Laws affecting Sellers

The new Australian Taxation laws apply from 1 July 2018.

Information for Sellers and their representatives

If you are supplying, by way of sale or long-term lease, residential premises (new or otherwise), or potential residential land to consumers, you will be required to notify your purchasers as to whether they have a withhold obligation. If they do, you will have to notify them of the amount they must withhold, when must pay it to us and of certain other particulars such as your name and ABN.

You may incorporate the notification in the contract of sale or lease, or you can provide it to the purchaser in a separate notice.

If you are unsure of the correct GST treatment of the supply you are making, it is recommended you seek advice from the Australian Taxation office (‘ATO’) , or your tax professional to avoid unintended consequences.

Solicitors/conveyancers and real estate agents are not able to provide GST advice unless they are a Registered Tax or BAS Agent.

Information for purchasers and their representatives

If you are purchasing new residential premises or potential residential land (and the exclusions do not apply) you will be required to withhold an amount from the purchase price and pay the amount to us.

Your Conveyancer, solicitor or real estate agent should be able to assist you gather the information you require.

  • Submit Form one: GST property settlement withholding notification
  • Submit Form two: GST property settlement date confirmation
  • Pay the withholding amount to the ATO

If you are unsure of the correct GST treatment of the property purchase you are making, it is recommended you seek advice from the ATO, or your tax professional to avoid unintended consequences.

Conveyancers and real estate agents are not able to provide GST advice unless they are a Registered Tax of BAS Agent.

If you authorise a representative to lodge the forms on your behalf then you are required to provide them with a signed declaration.

Transitional Arrangements for property contracts entered into before 1 July 2018

The new notification and withholding requirements do not apply to contracts:

  • Entered into before 1 July 2018
  • Where any consideration for the supply (other than a deposit) is provided before 1 July 2020.

Important thing to be aware of

  • A deposit or security paid on exchange of contract is not consideration for the supply (within the meaning of the GST law). A deposit becomes consideration when it is either released to the supplier or forfeited.
  • The time when a contract is ‘entered into’ is based on general contract law. A contract for the sale of a property is not entered into before 1 July 2018 if there is only an option granted to buy or sell the property. In most cases it will be necessary to look at the date at which that option is exercises to work out whether the transitional arrangements apply or not.