Okay, so there’s been some changes to how GST on a Contract for some settlements are paid. 10 days ago on the first day of the new financial year, the GST component of certain property sales became payable directly to the ATO by the purchaser, instead of by the supplier (or in the terms of a Contract, the Vendor).
Basically, prior to July 1st anyone buying a property paid GST on the purchase, along with the sale price, all to the entity selling the property (the Vendor). That entity then passed it on the the ATO. In regards to the GST component of this transaction, the middle-man (the Vendor) has now been effectively removed from the process. The Vendor still receives the sale price, but less the amount of the GST, which the buyer now sends straight to the ATO.
Well, the official line is that it was changed to “improve the integrity of the GST system for certain property transactions“, and it was announced back in the 2017/18 budget.
The more sceptical of us out there would probably suspect that the Government needs the money quicker, and has found a way to eliminate the wait to get it from the vendor.
Maybe. It applies to GST for new residential premises or subdivisions of potential residential land, where the Vendor is a property developer or a GST registered entity and the contract is entered into on, or after, July 1st 2018.
It won’t effect…
Definitely not. The ATO receiving the GST is not a condition of settlement. It also doesn’t change the amount of GST the Vendor needs to pay.
Probably not too much. There’s the usual paperwork involved, and administration stuff, but that’s what we’re here for. Chat to us and we can tell you as much or as little about it as you want to know.
There’s also some fines that apply to people who get the process wrong in certain ways, or neglect some of their responsibilities, but that’s what you’ve got a Conveyancer for.
We can answer all your queries without all the government jargon. Just drop us a line here.