GST Changes

The new financial year brought about some new rules when it comes to property sales in Australia.  Firstly, the process of paying GST on property changed placing the onus on the buyer rather than the seller.

If a property sale is subject to GST the purchaser must withhold the GST and pay it to the Australia Taxation Office (ATO).  This is a two step process:

  1. Lodgement of GST property settlement withholding notification form upon the signing of a purchase contract.
  2. Lodgement of GST property settlement date confirmation form when a settlement date is confirmed.

Once the GST property settlement withholding notification is received, the ATO will issue unique Payment Reference Number (PRN) and Lodgement Reference Number (LRN) by email within 24 hours.

Only one unique PRN will be issued per withholding notification form, even if multiple purchasers or suppliers are supplied on the form.

The purchaser’s obligations are not complete until the GST property settlement date confirmation has been submitted and the withholding payment has been made.  The GST is then paid quoting the PRN which will allow the ATO to allocate the GST payment to each seller as per the forms lodged.  The seller will then report the GST as part of their BAS return Based on their reporting cycle.  The GST liability reported will then be offset the payment made by the purchaser.

Clearance Certificates

As from 1st July 2018 any property sale over $750,000 a Vendor requires a Clearance Certificate from the ATO otherwise 12.5% of the sale price MUST be withheld.  The Clearance Certificate confirms that you are a resident of Australia for Tax Purposes.

Identification Requirement

This has been around a while but it still catches people out all the time so we have decided to mention it again.  When a new name is to be placed or removed from a Property Title, that person must have their identity verified via a Verification Process through Australia Post.  Whilst it is relatively straight forward complications do arise:

  1. Original Documents are required in all circumstances; and
  2. If you have had a name change the documents relating to those changes are also required for example Marriage Certificates or Deed Poll Changes.

Please note this process can take time so if you are planning on buying property or being added to a title please be prepared in advance.  Also it is worth noting most certificates such as birth and marriage can now be obtained on line at the births, deaths and marriage office in each state and territory.

For any assistance with any of these matters please do not hesitate to contact our office.

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