From 1 July 2018, anyone purchasing a new residential property or subdivision is required to pay the GST component directly to the ATO as part of the settlement.
These changes have had some teething problems.
To help clarify things, the ATO has set out a 5 step process that must be followed. Here are the steps:
The developer must provide accurate supplier details to the purchaser, including:
- Their name and ABN
- The GST-inclusive value of the property
- The date the purchaser must pay the withholding amount to the ATO
- How much the purchaser must pay
On the Form One (GST Property Settlement Withholding Notification), the purchaser needs to enter these supplier details
On settlement, the purchaser needs to pay the withholding amount and lodge a Form Two (GST Property Settlement Date Confirmation)
If the details provided in Form One match those of the developer’s GST property credits account, the ATO will then allocate a credit to this account
The developer must lodge their BAS, declaring that property transaction
Once all of these steps have been fully and accurately completed, the ATO will process the developer’s BAS and transfer the relevant credits to the developer’s activity statement account.
For more information and advice contact us on 02 8850 0388