Earlier this year, the ATO introduced a new GST withholding obligation affecting sales of new residential premises and potential residential land. This will generally apply to “off the plan” sales and potential residential land where the contract was signed after 1 July 2018. Contracts signed before this date will not be affected unless settlement takes place after 1 July 2020.
Generally speaking, most vendors must now give notice to a purchaser as to whether the purchaser is required to withhold GST and if so, what amount a purchaser must withhold, when they must pay it to the ATO, and certain other particulars.
The withholding amount is generally due at a settlement, but for instalment contracts, it will be the day the first instalment is paid.
The amount will usually be 1/11th of the sale price, but if the contract states that the margin scheme applies, then it may be 7% of the contract price.
Purchasers do not have to be registered for GST just because a withholding obligation applies.
