Queensland Law Society

Property law reform makes solicitors tax collectors

Recently, the Federal Government’s Treasury Laws Amendment (2018 Measures No.1) Act 2018 came into effect, with Queensland Law Society president Ken Taylor remarking that solicitors would effectively become tax collectors.

Mr Taylor said that changes requiring goods and services tax (GST) to be withheld at settlement on the sale of new residential premises or potential residential land have made selling property more complex.   

“These amendments will effectively make solicitors tax collectors, whereby they must first assess whether a client must withhold GST on a transaction, and then ensure that at settlement, a separate cheque for the GST is handed over and paid directly to the Australian Taxation Office,” he said.

“The new withholding process also requires two online forms to be lodged with the Australian Taxation Office (ATO), plus an ATO payment slip, all of which add to the complexity of the conveyance.

“This will likely add to the cost for our clients, and add more time to the solicitor’s work to ensure compliance with the new obligations.”

Mr Taylor explained that the amendments were complex, particularly in Queensland, where most land has the potential to become residential land with the correct approvals.

“The problem with this law is that it was written at a national level with only short periods of consultation,” he said.

“This has resulted in a ‘one-size-fits-all’ approach which does not suit Queensland.”

Queensland Law Society made submissions on the Bill, noting concerns including the inadequate consultation time and the increasing administrative burdens placed by governments at both the state and federal levels on the profession.

The GST withholding changes follow other recent impositions such as the foreign residents’ capital gains withholding measures and additional data collection and reporting requirements on property transfers to the ATO, via the Queensland Office of State Revenue. 

Mr Taylor explained that this legislation also alters the usual operation of the GST framework.

“This legislation sees both the seller and buyer responsible for GST to be paid to the ATO, meaning that one party must rely on the other party to deliver the GST amount to the ATO,” he said.

“This creates risk to one of the parties to the transaction, as well as another step post-settlement in the process of buying and selling property.”

QLS is also concerned that the final ATO remittance forms were finally released with little time for practitioners to become familiar with them.

“We were rather disappointed to see the final forms available on June 28 – a mere three days before solicitors would be required to use them,” Mr Taylor said.

Mr Taylor said that while the Society supported good law and amendments to legislation for the good of Queensland and Australia, they did not support imposing additional burdens and costs on Queenslanders and our members.

“It is disappointing that we have seen multiple additional administrative duties added to our profession over recent years by both the State and Federal Governments,” he said.

“This uncoordinated approach is not sustainable, nor is it fair to our solicitors, who are often small firms or sole practitioners.

“I hope in the future, that we see better and more comprehensive consultation on such legislation, particularly when it will have significant impact on our solicitors and their clients.”