Topics on CGT and GST for property buyers (24)

Written by Ideas Group | Mar 19, 2021 4:51:27 AM

Navigating Steps Three and Four in Property Transactions

Step Three: Determine Exclusions from Withholding Rules

Under S.14-215 of Schedule 1, exclusions to withholding rules may apply. It’s crucial for buyers to gather sufficient evidence supporting these exclusions rather than solely relying on seller representations.

Step Four: Determine Buyer's Cost Base of the Property

The withholding amount, usually 12.5% (previously 10%) of the property's first element of the cost base, requires careful calculation. Considerations include:

GST: For GST-registered buyers, the first element of the cost base is adjusted by input tax credits. Non-registered buyers typically consider the GST-inclusive purchase price.
Settlement Adjustments: Disbursements at settlement, like council rates, don't alter the first element of the property's cost base.
Related Party Dealings: The 'market value substitution rule' may apply if parties haven't dealt at arm's length, determining the cost base as the market value at acquisition.
Multiple Sellers: If only some sellers are subject to withholding, calculate based on their proportional interest in the property.

For further assistance, reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment through our live calendar.

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