Following the announcement of the 2017–18 budget, the Treasury has released the draft legislation for how GST will be applied to new property purchases next financial year.
One of the measures mentioned in the budget earlier this year was a legal requirement for buyers of new properties to send the goods and services tax (GST) to the Australian Taxation Office (ATO) as part of the purchasing process.
The proposed legislation will be applicable to those who buy a new residential premise or potential residential land that is included in a property subdivision plan and has not been sold as potential residential land before.
Currently, the role of sending the GST is on the developer, but a statement from the Treasury claims that “some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs”, and purchasers that utilise conveyancing services as part of the purchasing process “should experience minimal impact from these changes”.
If purchasers do not pay the GST, they will be charged with 100 penalty units, or $21,000, unless, at the time of purchase, the purchaser did not believe the premise was new.
This draft legislation will not affect those who enter a contract to purchasing new property before 1 July 2018 and some amount of money is put down to commit to the property (with the exception of a deposit) before 1 July 2020.
According to Kelly O’Dwyer, Minister for Revenue and Financial Services, the draft legislation will help address GST evasion through phoenixing — the act of a new business being created and continuing the work of an old, deliberately liquidated one, by “dishonest developers”.
“This legislation adds to the comprehensive package of reforms to address phoenixing announced by the government earlier in the year. It will clamp down on this type of tax evasion by unscrupulous businesses and level the playing field for developers who do the right thing,” Ms O’Dwyer said.
The Treasury is welcoming public input on the draft legislation, accepting submissions as of publishing until 20 November via email or by post.
The major brokerage has reported a record increase in home loan p...
The social media giant has commenced processing applications for ...
Purple Circle Financial Services has reported a record increase i...