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  • GST at settlement – a guide for purchasers and their representatives

    You may have a withholding obligation if you purchase or enter into a long-term lease of either:

    The withholding obligation means that when settlement occurs, the purchaser pays both:

    • the withheld amount of GST direct to the ATO
    • the balance of the sale price of the property, minus the withholding amount, to the supplier.

    Your supplier must provide you with information to assist you to comply with your withholding obligation. They generally do this via their representative when selling the property.

    You can incur penalties if you fail to pay the required withholding amount to us.

    GST at settlement started on 1 July 2018. Transitional arrangements apply to contracts entered into before this date.

    Find out about:

    See also:

    Determine if you have a withholding obligation

    Suppliers need to provide you with written notification (supplier notification) advising if you have a withholding obligation or not. Suppliers can incorporate the notice into the contract for sale or provide it to you as a separate notice.

    You don't need to register for GST because of a withholding obligation.

    Transitional arrangements apply to contracts entered into before 1 July 2018.

    For more information see Properties that are included and excluded.

    Supplier notification

    The notice from your supplier should include:

    • the name and ABN of all suppliers
    • GST branch number (if applicable)
    • the amount you must pay to us (rounded down to the nearest dollar)
    • the date you must pay the withholding amount to us
    • GST-inclusive contract price (plus the GST inclusive market value of non-monetary consideration).

    When to get a supplier notification

    The supplier must provide the notice on or before the time they make the supply.

    The supplier notification can be included in the sales contract or in a separate document provided before settlement. All law societies (except Northern Territory) have revised their standard land contracts to include the notification.

    Multiple suppliers

    If you're purchasing a property from more than one supplier, your suppliers should notify you of each supplier's share of the withholding amount.

    If they don't notify you of amounts for each share of the withholding amount, you may allocate them equal shares.

    Relying on a supplier notification

    You don’t need to make further inquiries about the GST registration status of a supplier when both:

    • a supplier advises that a sale isn’t subject to GST (that is, the supplier isn’t registered or required to be registered for GST)
    • you have taken reasonable steps to ensure you don’t need to withhold.

    We won’t retrospectively penalise you when you have acted reasonably and it’s later found that a supplier hasn’t met their notification obligations correctly.

    Reasonable steps

    We consider 'reasonable steps' include the following:

    • Review the sale contract and supplier notification to ensure they advise whether you’re required to withhold or not.
    • In reviewing the sale contract and withholding notification, ensure it contains the necessary information – if the notification isn't clear, seek clarification from the supplier.
    • You don’t need to search for further information, even if the notification states you’re not required to pay a withholding amount, but you must consider all information to do with the sale.
    • Once you have considered this information, determine whether you need to withhold or not.
    • If you have taken reasonable steps and made a decision to rely on the supplier notification not to withhold, but you still have some concern about the supplier, you can report your concerns about them to us.

    We won’t impose penalties when you rely on supplier notification and you have taken reasonable steps to determine the notification is correct at the time.

    If your supplier hasn't advised you about an error on the notification on or before settlement, you can rely on the original notification.

    It is unreasonable not to withhold and pay an amount to us if you know a supplier is registered for GST and selling new residential premises not previously sold.

    Information in the supplier notification changes

    If the required information changes after your supplier provides the notice, they must provide you with a new notice.

    This could include when a supplier discovers they should be registered for GST or for changes to the contract price due to a variation or discount that applies before settlement.

    For more information see How to amend or cancel your forms.

    Margin scheme

    If you purchase a property and the margin scheme is applied to the sale, you can't claim a GST credit for the GST included in the price.

    If you were charged the full rate of GST when you purchased a property as part of your business, generally you can claim the GST back. However, you can’t apply the margin scheme on a subsequent sale.

    See also:

      Last modified: 05 Jul 2021QC 56253