Payment Timing: Under a standard land contract, the buyer typically needs to pay the withholding amount by the settlement date. If the property is purchased under an instalment contract, the payment is due on the day the first instalment is paid. Buyers can make the payment directly to the ATO or indirectly through the seller.
Transitional Rule for Pre-July 2018 Contracts: If a contract for the sale of new residential premises or potential residential land was entered into before July 1, 2018, and any consideration (apart from a deposit) is given before July 1, 2020 (or settlement occurs by June 30, 2020), GST withholding doesn't apply. Additional transitional rules may apply for certain payment arrangements made before July 1, 2018.
When Does GST Withholding Apply? GST withholding rules apply to taxable supplies (like sales or long-term leases) of certain new residential premises and potential residential land. These supplies are considered taxable under the GST Act if they're made by a GST-registered taxpayer or a taxpayer required to be registered for GST, involve property in Australia, and aren't GST-free or input taxed.
In most cases, supplies of new residential premises and potential residential land aren't considered input taxed supplies, except for new residential premises used for residential accommodation before December 2, 1998.
Need Assistance? For any questions or assistance regarding GST withholding rules or property transactions, feel free to contact Tax Ideas Accountants & Advisers at +61 2 83181545, or schedule an appointment through our online calendar.