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Australia Seeks To Ensure GST From Property Transactions

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

28 February 2018


Australia's parliament is currently considering the introduction of a new goods and services tax payment obligation on the real estate industry, included in the Treasury Laws Amendment (2018 Measures No. 1) Bill 2018, tabled on February 7, 2018.

It has released a draft version of the legislation with an explanatory memorandum.

The change, proposed to be effective from July 1, 2018, is intended to improve the integrity of GST on property transactions. First announced in May 2017, the Government proposes to strengthen compliance with the GST law by requiring purchasers of newly constructed residential properties or new subdivisions to remit the GST directly to the Australian Tax Office (ATO) as part of settlement.

Under the current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs.

The Government said that as most purchasers use conveyancing services to complete their purchase, taxpayers should experience minimal impact from the changes.

The Government has proposed a two-year transitional arrangement, covering contracts signed before July 1, 2018, as long as the transaction is settled before July 1, 2020.

TAGS: compliance | VAT tax authority guidance | tax | property tax | VAT legislation | law | goods and services tax (GST) | Australia | enforcement | tax authority | legislation | services | VAT compliance matters

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