Australia To Change GST Treatment of New Homes

by Mary Swire, Tax-News.com, Hong Kong

27 September 2011

Previously announced changes to the application of goods and services tax (GST) to newly constructed residential premises will not apply prior to January 27, 2011, Australian Assistant Treasurer Bill Shorten has clarified.

Exposure draft legislation has been released to ensure GST is payable on the full value added to newly constructed residential premises by developers.

The Assistant Treasurer confirmed that the legislation would not apply to sales of residential premises constructed under eligible arrangements entered into prior to January 27, 2011. An eligible arrangement is defined in the legislation as an arrangement or agreement that is enforceable by legal proceedings.

The amendment also clarifies that that the subdivision or strata titling of residential premises (other than new residential premises) does not result in the creation of new residential premises and therefore the measure will also not apply to supplies of residential premises made on or after January 27, 2011 if the supply is because of a property subdivision plan lodged before that date.

The amendments will ensure that the sale of newly constructed residential premises to home buyers and investors is subject to GST even though there may have been an earlier 'wholesale supply' of the premises.

"The measure contained in the draft legislation will ensure GST applies as intended to sales of new residential premises to home buyers and investors by builders and developers," Shorten said.

"I encourage interested parties to provide feedback on the proposed legislation and explanatory memorandum."

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