New draft GST legislation introduced

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On 6 November 2017, the federal government released new draft GST legislation that will take effect from 1 July 2018. Purchasers of new residential premises and home sites will be required to pay the GST on the purchase price directly to the ATO.

Developers will be required to provide written notice to the purchaser stating the amount of GST to be withheld. A penalty of $21,000 applies for non-compliance. Also, the purchaser will need to withhold GST equal to 1/11th of the total price, even if the actual GST is lower such as when the margin scheme is used. Developers will report the actual GST amount in their business activity statement and be entitled to a credit for the amount paid to the ATO by the purchaser and a refund if this exceeds the actual GST.

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