Buying, selling or entering into a long term lease of NEW residential property or land?
Buying, selling or entering into a long term lease of NEW residential property or land ? New does not mean New. It’s now the Buyer who must collect the GST and pay to the ATO. If you are you are selling, purchasing or entering into a lease of new residential premises or land, there is new legislation that may apply to you as of 1st July 2018 which requires the purchaser to remit GST to the Australian Taxation Office on the payments made to the seller.
Sellers & Lessors
Under this legislation it is the responsibility of the seller and lessor to notify the purchaser whether there is a liability to pay GST on the supply. The notification must be made in writing and must state:
Suppliers name and ABN
GST payable by the purchaser
When the GST is due for payment
Where some or all of the consideration for the supply is non-monetary – the GST inclusive market value of that non-monetary amount.
Failure to provide notification can result in a maximum fine of $21,000 for individuals and $105,000 for corporations.
Purchasers & Lessees
The legislation has provisions to safeguard purchasers from the negligence of sellers. However, great care needs to be given here to ensure the purchaser provides accurate information the seller which they have relied upon when making their written notification.
Exclusions that may apply
The seller or lessor may not be required to give notice when the supply is
The supply of commercial residential premises
The supply of potential residential land to an entity which is registered for GST and acquires the land for a creditable purpose.
The purchaser or lessee may not be required to remit GST to the Australian Taxation Office where:
The new residential premises have been created through substantial renovations of a building AND are not commercial residential premises OR
The land is included in a property subdivision plan AND does not contain any building that is in use for a commercial purpose.
STILL NOT SURE?
Contact Kostkas to request a GST Withholding on Residential Property Advice.