GST at settlement

On or after 1 July 2018, certain purchasers of new residential premises or potential residential land will be required to withhold an amount from the price of the supply for payment to the ATO.

Note: When the ATO refers to purchasers they are also referring to lessees under long-term leases.

The withholding amount is due on or before the day that consideration for the supply (other than a deposit) is first provided. If the contract is an instalment contract that will be the day the first instalment is paid otherwise it will be the day of settlement.

Suppliers will be required to assist their purchasers to comply by notifying them whether or not they have a withholding obligation on supplies of certain kinds of residential premises and potential residential land. Where there is a withholding obligation, the supplier must notify the purchaser of the amount they must withhold, when they must pay it to us, and of certain other particulars.

The amount a purchaser must withhold and pay to us is generally either:

• 1/11th of the contract price (for fully taxable supplies)
• 7% of the contract price (for margin scheme supplies), or
• 10% of GST exclusive market value of the supply (for supplies between associates for consideration less than GST inclusive market value).

Purchasers do not need to register for GST just because they have a withholding requirement.

Transitional arrangements apply to contracts entered into before 1 July 2018.