GST Withholding from 1 July 2018

From 1 July 2018, purchasers of new residential premises or potential residential land will be required to withhold an amount from the price for the supply and pay that amount to ATO on or before settlement.

The property transactions impacted are taxable supplies (for example, sales and supplies by way of long term lease) of new residential premises or taxable supplies of potential residential land where the contract is entered into before on or after 1 July 2018.

To provide certainty to purchasers, a supplier (vendor, seller, etc) of residential premises or potential residential land must notify in writing whether a purchaser is required to withhold an amount.  If the purchaser is required to withhold, the supplier must also notify the purchaser what that amount is and when it needs to be paid to us.

The general rule is that if the property sale contract specifies an amount that is the price of the supply (for example, the contract price) then the withholding amount is calculated on the contract price.  However, there are some situations where the amount to be withheld must be calculated differently.



The margin scheme applies to the supply

7% of the contract price or price

The supply is between associates and is without consideration, or is for consideration that is less than the GST inclusive market value of the supply

10% of the GST exclusive market value of the supply

There is a mixed supply, for example only partly a supply of new residential premises or potential residential land

A reduced amount using a reasonable apportionment of the contract price or price multiplied by the applicable rate.

There are multiple purchasers (not joint tenants)

7% (margin scheme) or 1/11th of the contract price or price for their % interest in the property purchase.

Transition period

The new withholding requirement will apply to all Contract of Sale for new residential properties including residential lot subdivision with contract dated on or after 1/7/2018 (other than certain type of exempted properties).  Only for contracts dated prior to 1/7/2018 but settles before 1/7/2020, the purchaser does not need to withhold.  It is believed that the GST withholding regime will have a significant impact on real property transactions.

What does it mean to you?

For purchasers of new residential properties, you will need to be aware of your obligation to withhold.

For developers, the change will effectively mean that a substantial percentage of settlement proceeds (i.e. GST component) will not be accessible until much later and this may have some negative impact financially for the required cashflow.

 Notification appears to be mandatory on the vendors for all Contract of Sale for residential properties (regardless whether old or new).  Therefore, if you are entering into a Contract of Sale on or after 1 July 2018 as a vendor, please ensure that you send the purchaser the required notification unless the property falls into one of exempted types (e.g. commercial residential properties or if the purchaser is registered for GST and acquires the land for a creditable purpose). 

If you are entering into a Terms Contract, the time required to withhold GST is when the first payment other than deposit is made therefore can be much earlier than the actual settlement date.

What next?

We have updated our special conditions for Contract of Sale specifically those for off the plan/new residential properties so that every contract prepared after 1 July should contain the relevant special condition.  Please be cautions of using any previously prepared Contract.  Please contact us if you have a need for updating the Contract in this regard.  We would recommend that at least a one pager additional special condition is included if you were continuing to use any previously prepared Contract of Sale.  However, given this extremely busy time of the year, please allow a few weeks for necessary changes to be implemented/finalised.  Additionally, it is inevitable that given the ever more complex process involved, the transactional cost (including legal fee) will be increased as a result.


从2018年7月1日起, ATO将缴纳义务转嫁给购买方,由购买方代扣代缴GST。开发商必须在交割时通知购买方GST的相关信息。未及时发出通知的开发商将被处罚。

购房者须在交割当天或者交割之前向ATO代缴GST,代缴数额是交易总价的11分之1,即使实际需缴纳的GST低于代扣数额(比如开发商使用了margin scheme)。

如果代扣的数额大于实际应缴纳数额,开发商需要通过提交business activity statement (BAS) 来进行退税。

如果开发商只提交季度或者年度BAS,并使用了margin scheme,则可以在BAS提交之前申请退税。


这次的GST新规定使开发商不能再保留GST税款到最长一个季度的时间,但是对延迟建筑成本的GST退税并没有改善。此外,当开发商使用了margin scheme, 开发商不得不等待3个月,或者递交单独的GST退税申请。因此,这项政策将一定程度上影响到开发商的现金流。







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