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ARTICLE · 15 MAY 2017

Developers face new GST issues on property sales in the 2017 Budget

Cooper Grace Ward
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Purchasers of residential properties or land in new subdivisions will be required to collect and remit GST to the ATO.

AustraliaTax
Fletch Heinemann
Fletch Heinemann
Marcus Ford
Marcus Ford
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An unexpected measure in the 2017 Budget is that, as from 1 July 2018, purchasers of new residential properties or land in new subdivisions will be required to collect and remit GST to the ATO when buying. Developers will need to amend their contracts to protect their position following the changes.

What will the new GST reporting system look like?

The Budget Papers are light on detail but identify two policy drivers.

The first is that:

Some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs...

To the extent that there is a problem with businesses claiming input tax credits, and then failing to remit GST, this is not limited to the property industry. It is symptomatic of businesses struggling in any industry. In our experience, companies wound up at the request of the ATO often have outstanding GST liabilities.

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