New GST Withholding Rules
Rede GST Accountants Gold Coast, Brisbane & Toowoomba
New GST Withholding Rules – commencing from 1 July 2018
What do the new GST Withholding Rules mean for Vendors and Purchasers?
Impact on Vendors
- All vendors of ‘residential premises’ or ‘potential residential premises’ (not just new residential premises) must notify the purchaser in writing of its withholding obligations. Severe penalties will apply for failure to comply.
- Vendors will include its GST Liability in its BAS and then receive a credit for the GST that has been withheld.
- Vendors cash flow will be impacted as it brings forward the Vendors GST liability to settlement date, and the vendor only claims its credit when the BAS is lodged.
Effect on Purchasers
- Purchasers will be required to withhold and pay GST at settlement on any contracts from 1 July 2018.
- The withholding rate will be 1/11th of the GST inclusive purchase price set out in the contract OR 7% of GST inclusive price if applying the Margin Scheme
Purchasers are strictly liable to pay to the ATO the amount withheld from the contract consideration. Failure to comply can result in penalties up to 100% of the amount to be withheld.
If you would like some advice on how these changes could affect you please contact us here.