From 1 July 2018, the Federal Government will introduce GST Withholding, strengthening compliance with the Goods & Service Tax (GST) law by requiring purchasers of newly constructed residential properties or new subdivisions to remit the GST directly to the Australian Taxation Office (ATO) as part of the settlement. Under the current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs.

The measure will require the purchaser of newly constructed residential properties of new subdivisions to remit the GST on the purchase price directly to the ATO as part of Settlement for contracts on or after July 1, 2018.

New GST withholding is expected to now occur at the Autumn sitting, between February 5th and 8th and will be passed within that sitting period by at the latest the end of March. Once introduced the Explanatory Memorandum will be available and the implementation phase will be underway.

The ATO has commenced preparation despite the delay in passing the law, and have started to draft forms along with the process required of conveyancers.

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