Following CGT withholding requirements introduced 1 July 2018, the federal government has once again effectively ‘contracted out’ tax collection to make it part of the settlement process, this time for GST.
If the property is a new residential premises or potential residential land (vacant residential land) the buyer will probably need to withhold at settlement a GST component for payment to the ATO, so the contract needs to include a notice from the seller if the GST withholding applies or not.
Failure to give that notification can result in a penalty against the seller.
Our advice is to use the latest version contracts (whether it’s REIQ or ADL) and complete the GST withholding section with advice from the seller’s accountant or financial advisor when required.
For more information contact us on 1300 765 488 or visit the ATO website.