GST withholding provisions came into effect on 1 July 2018. The provisions are relevant to all purchasers and vendors of residential real estate.
The legislation requires most vendors to supply a notification to purchasers (which is usually part of the section 32 statement) stating whether the GST withholding provisions apply. For established homes the notification will simply state that the GST withholding provisions do not apply. However for new homes or for vacant land that can potentially be used for residential purposes (eg purchasing land off the plan) the GST withholding provisions will apply (with some exceptions) and the notification needs to contain details of the amount to be withheld.
The effect of the legislation is to require the purchaser to make a payment to the Commissioner for Taxation at settlement for the Vendor’s GST liability.
There are penalties for both the purchaser and vendor if there is a failure to comply with the legislation.
Oakhill Lawyers ensures that all vendors and purchasers comply with this legislation. For further information please contact us.