Goods And Services Tax Changes
Purchasers to Pay GST on New Residential Premises
From 1 July 2018, the Federal Government will strengthen compliance with the GST law by requiring purchasers of new residential premises and land in new subdivisions to remit the GST on the sale directly to the ATO as part of the property settlement process.
Under the current law, the seller of new residential premises or subdivided land is required to collect and remit the GST associated with the sale to the ATO through its Business Activity Statement. The Government has identified that some property developers are failing to remit the GST on their sales, despite claiming credits for GST incurred on development costs. To combat this non-payment of GST, the responsibility for payment of the GST will be shifted to the purchaser. Given most purchasers use conveyancers to assist with the transfer and settlement of properties, the Government believes this change should not represent a significant additional burden for purchasers.
We expect that property developers will face additional compliance costs as a result of the change, and will be forced to change the settlement statement provided to the purchaser to identify the GST payable on the sale so that the purchaser can remit this amount to the ATO. The change could also result in cash flow issues for developers as they will no longer have the benefit of the GST component of the sale proceeds in their bank account for the period between settlement and lodgement of their Business Activity Statement. Finally, purchasers’ conveyancing costs may increase subject to what processes are established by the ATO to facilitate payment of the GST.
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Other Articles in This Edition:
Some of the Biggest Mistakes Small Businesses Make With Their Websites
Federal Budget – Economic Summary
Small Business - $20k Small Business Immediate Tax Deduction
Small Business - Company Tax Rates
Small Business - Extension of Taxable Payments Reporting to Courier and Cleaning Industries
Small Business - Access to CGT Concessions
Small Business - Looking to Employ Foreign Workers?
Individual Tax Rates
Individuals - Changes to the Medicare levy
Restricting Residential Investment Property Deductions
Individuals - Higher Education Reform
Superannuation - Contributing Proceeds from Downsizing to Superannuation
Superannuation - First Home Super Saver Scheme
GST Changes - Digital Currency & Low-Value Imports
Tax Integrity Measures
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