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GST at settlement update

January 20, 2019

Members should be aware that since 1 July 2018 purchasers of new residential premises or potential residential land have been required to withhold GST from the supplier and instead pay it directly to the Australian Taxation Office (ATO) by settlement. General information about these arrangements is on the ATO website

The ATO has reviewed the operation of the new arrangements and plans to make enhancements to its forms and communications from October 2019. These enhancements should include allowing multiple properties to be entered on the one form, measures to stop incorrect information being entered, and more information to emails from the ATO to allow the purchaser to check that correct information has been provided in Forms 1 and 2.

The ATO has also noted two common mistakes with the new process.

  • Some purchasers are lodging GST property settlement withholding notifications with an amount of zero for the withholding amount. If the amount is zero the Form 1 should not be needed. The ATO suggests that purchasers wait until receiving a supplier notification for the sale before lodging a Form 1.
  • Some suppliers are not properly reporting the property sale, including the GST amount, in their Business Activity Statement. The supplier still has to record the GST liability even though it should be paid directly to the ATO by the purchaser.