Purchasers Required To Withhold GST on Settlement

Purchasers Required To Withhold GST on Settlement

Purchasers of real property are already required to withhold from vendors an amount equal to 12.5% of the purchase price on account of the vendor’s capital gains tax liability and send it to the Australian Tax Office unless a clearance certificate is received from the ATO. Now from 1 July 2018 purchasers of new residential properties such as off-the-plan units or potential residential land included in a subdivision plan are required to withhold up to 10% of the purchase price representing the GST on the sale and submit it to the ATO. Even though the GST withholding requirement only applies to the sale of some properties, ALL vendors of ALL properties must notify purchasers whether or not they are required to withhold part of the purchase price, and, if so, certain other relevant information. If either a vendor or a purchaser does not properly comply with their obligations they they will be guilty of offences and can be fined.