In an effort to prevent some property developers from avoiding their GST obligations, the responsibility for collecting and remitting GST has been removed from the developer and handed to the purchaser in some conveyancing transactions.
Where a contract is entered into on or after 1 July 2018, the purchaser is required to hold 1/11th of the price of the purchase on the contract and remit that amount to the Taxation Commissioner on or before settlement on new residential premises and subdivisions of potential residential land where the purchaser is not registered for GST.
The vendor is required to provide written notice to the purchasers of the obligation amongst other things.
Where a purchaser fails to comply with this obligation, they will be liable for an administration penalty equal to the amount unless of course they have relied on a notice from the vendor indicating the property was not a new residential premises.
Whether you are a developer or a purchaser, the new regime imposes significant compliance burdens and advice should be sought in relation to your obligations from your solicitor.
Advice on your property sale or purchase can be provided by contacting eConveyancing NSW on (02) 8812 5459 for further information noting the advice above is only a general guide on the subject matter or email us on hello@eConveyancingNSW.com.au.