Overview of the GST
The Goods and Services Tax (GST), effective from 1 July 2000, applies to certain types of property transactions. However, generally, GST does not apply to existing residential land sales and purchases.
The residential properties that can attract GST are those properties that:
- have not previously been sold as residential premises;
- have been created by a substantial renovation of a building; or
- have been built to replace demolished premises on the same site.
If you have an issue with the GST (and this area can be very complex where property is concerned) it is strongly recommended that you obtain professional advice from your accountant.
GST withholding regime
Since 1 July 2018, if GST applies to the sale of a residential property, the buyer may be required to withhold the GST and pay it to the Australian Taxation Office (ATO) at settlement. A vendor’s A legal practitioner (lawyer) who sees clients and opens files to deal with their legal matters but usually does not appear in court. See also barrister. or conveyancer must advise a buyer if they are required to withhold GST (and the vendor’s conveyancer A document that sets out what a person wants to happen to their money and other property after they die. usually ask the vendor’s accountant to confirm this advice if the property is not an existing residential property).
A buyer can be penalised for not withholding GST. As it is the buyer’s obligation to remit GST directly to the ATO, if there is any doubt in the buyer’s conveyancer’s mind about whether GST should be withheld at settlement, the conveyancer should apply to the Commissioner for a An opinion given by the Australian Taxation Office to an individual taxpayer. The ruling is binding on the ATO, so if the taxpayer acts according to the opinion, the ATO cannot take the taxpayer to court if the opinion later turns out to be wrong..