Queensland Law Society

GST at settlement—end of transitional arrangements 1 July 2020

The GST at settlement transitional arrangements ends on 30 June 2020. Contracts entered into before 1 July 2018 for new residential premises or potential residential land may now be subject to the withholding obligations under GST at settlement.

The Australian Taxation Office recommends that practitioners:

  • check your clients signed contracts for new residential property or potential residential land
  • identify any signed before 1 July 2018 that are still waiting for settlement to occur
  • advise them about their GST at settlement obligations and what they need to do.

QLS reminds practitioners that versions of the REIQ contracts since 28 June 2018 provide for the Buyer to deliver a bank cheque for the GST Withholding Amount to the Seller at settlement and for the Seller to pay the GST Withholding Amount to the ATO in compliance with the Withholding Law promptly after settlement.  Please see the FAQs published in June 2018 for more information.

Example

On 11 May 2018, Rachael entered into a contract to purchase a new home unit from developer WatsonHomeCo for a contract price of $650,000. Rachael pays a 10% deposit of $65,000.

As the supplier of the property, WatsonHomeCo needs to notify Rachael that she has to withhold $59,090 (1/11th of $650,000) and pay it to the ATO at settlement.

Rachael is required to complete and lodge the two online forms to the ATO.

Rachael’s property is finished and the settlement date is 2 July 2020.

Unless the contract provides for the seller to retain the GST withholding amount at settlement, on 2 July 2020, Rachael must withhold and pay $59,090 to the ATO and pay WatsonHomeCo the balance of the contract price (being $525,910).

The ATO’s website has more detailed information, see: