GST Withholding Regime takes effect from 1 July 2018

1. 05.04.18OLD :325777_183.DOCX COAST REAL ESTATE TEAM CONTACTS TO EMAIL A MEMBER OF OUR TEAM USE FIRSTNAME.LASTNAME@MINTERELLISON.COM
Bryce Melville Rebecca Sheppard Yvette Mason Shona Condon Marieanne Golubinsky Mark Borg Meaghan Brodie Danika Cardon-Smith
PARTNER SENIOR ASSOCIATE ASSOCIATE ASSOCIATE GRADUATE GRADUATE PARALEGAL CLERK
T: +61 7 5553 9424 T: +61 7 5553 9490 T: +61 7 5553 9400 T: +61 7 5553 9530 T: +61 7 5553 9539 T: +61 7 5553 9512 T: +61 7 5553 9411 T: +61 7 5553 9484
30 April 2018
Property Developments
GST Withholding Regime takes effect from 1 July 2018
The Federal Government has passed the Treasury
Laws Amendment (2018 Measures No. 1) Act 2018
(Cth) (Act) to implement the GST reforms announced in
the 2017-2018 Federal Budget. The Act shifts the
responsibility for GST payments for new residential
premises and subdivisions from developers to buyers
from 1 July 2018.
What changes will occur?
You may recall from our ‘GST Withholding Regime for
New Residential Property Transactions’ Property
Developments article from 14 December 2017 the new
measures apply from 1 July 2018 to:
• new residential premises; and
• new subdivisions of potential residential land, such
as house and land packages.
Under the Act:
• developers must make additional disclosures to assist
buyers in determining whether the withholding
obligation applies; and
• buyers must withhold and pay the GST to the ATO as
part of the settlement process.
How is the GST amount calculated?
The Act provides that the contract price (prior to
adjustments) will be used to calculate the GST payment.
The amount payable will be:
• 1/11th of the contract price; or
• 7% of the contract price if the margin scheme applies.
The developer will then receive a GST credit through its
normal BAS lodgement.
ATO direction
The ATO has issued a draft ruling on the new regime.
‘LCR2018/D1 Purchaser’s obligation to pay an amount for
GST on taxable supplies of certain real property’ can be
found on the ATO website and provides useful information
on the application of the new GST withholding provisions.
Next steps
The payment of GST by buyers will have significant
implications for both developers and buyers (including
potential cashflow issues for developers).
We are happy to assist developers in addressing the new
requirements in their contracts moving forward.
*Disclaimer
The information contained in this update is intended as a guide only. Professional
advice should be sought before applying any of the information to particular
circumstances. While every reasonable care has been taken in the preparation of this
update, MinterEllison does not accept liability for any errors it may contain.