From July 1st, 2018, there are new GST Withholding Laws that come into effect in Australia that directly affect the seller or their representative. If you are selling (or long-term leasing) a residential property that is new and never been occupied, you have a duty to inform the buyer of any amount of GST they should withhold. If you are not sure whether or not the property you are selling comes under this category, you should contact your nearest Australia Tax Office (ATO).
Vacant Land For Residential Development:
If you are selling a plot of land that is designated for residential development, then the stated amount should be withheld by the purchaser and details of this should be in the contract of sale. Should the purchaser not be registered for GST, then they must remit a settlement on behalf of the vendor, which could be a prior remittance or a retainer at the settlement. GST must be paid every time a residential plot of land changes hands, so if a person purchases the land then resells it without building, the GST must be paid, as with the first sale.
This would depend on whether the property is a sale on the margin scheme or a plus GST transaction. If it’s a sale on the margin scheme, the buyer must remit 7% of the contract price to the ATO. If sold as a plus GST transaction, the buyer must remit 1/11th of the contract price to the ATO.
Sourcing a Conveyancing Solicitor:
At some point, you will need an experienced conveyancing solicitor, as can be found at https://www.rivercityconveyancing.com.au/ who can provide an affordable service and can ensure that all your obligations as a seller are met. It is not advisable to proceed with the sale of any property without enlisting the help of a legal expert – who can help you to compile a contract of sale that includes everything it should. Should you not fully understand what is required and if the conveyancing solicitor is unable to give you information regarding GST, you are advised to contact the ATO.
Seller’s Notification Requirements:
The seller is required to give the buyer:
- New Residential Premises
- Residential Land
- Existing Residential Premises
In the event the seller fails to notify the buyer, this is an offence under the Withholding Law, yet the sale can still go ahead and the buyer is not penalised. The seller may be required to give details about the buyer, including name, ABN, GST amount payable and the settlement date.
If the seller fails to carry out their required tasks, they could be fined up to $21,000 per offence, which is a substantial amount of money for anyone. If you are new to the real estate industry, make sure you hire an experienced conveyancing solicitor who will ensure that you meet all the legal requirements and that the contract of sale is as it should be. If you are looking for legal assistance when buying or selling the property, an online search will put you in touch with a local law firm that specialises in conveyancing.