Buyers now required to remit GST when purchasing properties by our accounting firm in Melbourne blog image

Buyers now required to remit GST when purchasing properties

Facebook Twitter LinkedIn Mail Us

Our Chan & Naylor accounting firm in Melbourne talks about the changes to GST rules for new residential premises. They have been passed by the Parliament houses and have already received Royal Assent. Starting July 1st, buyers of new residential premises or subdivisions are required to remit the GST on the purchase price directly to the ATO as part of the settlement process. It is important to contact an accounting firm to find out more about this development.

GST is currently included in the purchase price and the developer is the one who remits the GST. However, the ATO is concerned that some developers do not remit the GST even after claiming GST credits on their construction expenses.  

There are “phoenix operators” who establish special purpose companies which will undertake residential developments. These companies claim full input tax credits for GST incurred on construction, land and development costs. There are no sales involved during a project’s development phase so the credit claims prompt cash refunds from the ATO. However, when the project is then completed and new residential lots or premises are sold, the special purpose company does not remit the GST on the sales. According to the ATO, about 4,000 developers have been engaged in this activity in the last five years. 

The ATO can implement recovery action against these special purpose companies but aside from the fact that such recovery action is time-consuming and costly, the chances of recovering the GST are reduced when all the sales processes have already been distributed out of them. Thus, this will be addressed by requiring buyers to pay the GST instead.  

“New residential premises” is defined as premises which haven’t been sold previously as residential premises, have been developed through substantial building renovation or are a replacement to demolished premises on the same land. The amount payable is a proportion of the contract price. 

Suppliers are required to give buyers accurate notice of their GST obligation as it constitutes as an offense if they fail to do so. For contracts which are entered into before July 1st, 2018 and supply consideration that is provided before July 1st, 2020, the new law is not applicable. 

If you would like to know more about property investment and tax planning, you can click here to know more about Chan & Naylor services. You can leave your details here and our Chan & Naylor accounting firm in Melbourne can schedule you for a free consultation. We’ll contact you to explain more. 

Whether you are a beginner, seasoned investor or business owner, our property and business tax accountants can give you guidance to maximise the financial areas of your life. We can also give you an integrated and tailored solution for your superannuation, taxation, property investment, asset protection, estate planning and more.  

Click here to schedule a chat at our accounting firm in Melbourne or visit any of our local offices near you. 

If you like what you are reading, subscribe to our newsletters now at or follow our Facebook page.

Related:  Chan & Naylor congratulates the SMSF Summit and Accounting Awards 2017 winners

Chan & Naylor Group has national offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and South West Sydney, Parramatta, Pymble, North Sydney, and Sydney in New South Wales.


To view the original content, click here.

Leave a Reply

Your email address will not be published. Required fields are marked *

Join our mailing list today!

Keep up to date with our latest news & updates!