The Australian tax office is implementing changes to real estate property investors who are purchasing properties from the 1st July 2018 onwards
This short video produced by the ATO may help you understand some of the changes
How the measure will work from 1 July 2018
Step 1: Supplier notification
Unless the purchaser has been notified in writing as to whether or not there is a requirement to withhold, a supplier must not supply, by sale or long-term lease, either:
- residential premises (new or old, not being commercial residential premises such as hotels or motels), or
- potential residential land to a purchaser who is not a registered entity acquiring the land for a creditable purpose.
If the purchaser does have a withholding obligation then the supplier must notify the purchaser of:
- the amount they must withhold
- when they must pay it to the ATO
- certain other particulars such as the supplier’s name and ABN.
See also:
- Long term lease
- New residential premises
- Potential residential land
- Registered entity acquiring the land for a creditable purpose
Step 2: Lodge form one
If there is a withholding obligation then there are two online notification forms which the purchaser or their representative is required to submit:
- Form one is the GST property settlement withholding notification
- Form two is the GST property settlement date confirmation
Note: A purchaser can authorise a representative to lodge one or both forms on their behalf by providing the representative with a signed declaration.
Form one: GST property settlement withholding notification online form is the first form that is required to be lodged with the ATO.
The form can be lodged at any time after the contract has been entered into and up until the due date for payment of the withholding amount.
Once the form is submitted an online confirmation screen will be displayed. A confirmation email will be issued automatically to the purchaser’s (or their representative’s) email address (if provided), or can be printed from the screen. The confirmation will provide a unique payment reference number (PRN) and a lodgment reference number (LRN).
The PRN and LRN will be used to lodge the second form and the PRN will also be used to make the payment.
Step 3: Lodge form two and pay
Form two: GST property settlement date confirmation online form is to be lodged on or before the date of settlement. The purchaser or their representative must notify the ATO (using the PRN and LRN) confirming property settlement date. This form is to confirm that settlement has occurred.
Payment can be made using the PRN, the purchaser will pay the withheld amount directly to the ATO. The purchaser will receive an email confirmation once the payment is processed in their withholding account, as proof of payment for their records.
When we have processed the purchaser’s withholding payment, we will notify the supplier by email of the GST property credit amount and the related property settlement. This is subject to the supplier having recorded an email address for their activity statement account.
A supplier can update their details online:
- using the ATO online services for individuals and sole traders (you will need a myGov account linked to the ATO)
- through the ATO Business PortalExternal Link.
Step 4: Business activity statement (BAS)
The fact that a purchaser has a withholding obligation does not alter the supplier’s obligation to lodge their Business activity statement (BAS) and report their GST liability (if any) in respect of the supply.
Once the supplier has lodged its BAS, the supplier will receive a credit for the amount the purchaser has withheld and paid to the ATO
Source and for further information:
https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Property/GST-at-settlement/?page=4
