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  • Purchaser obligations

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    Lodge form one

    When you have a withholding obligation you must complete the GST property settlement withholding notification online form (form one).

    Form one is used to advise us that a contract has been entered into for the supply of new residential premises or potential residential land in respect of which there is a withholding obligation.

    The information you need to complete form one should be set out in the supplier's notice.

    You can submit form one at any time after a contract has been entered into and prior to the date your withholding obligation is due. Usually that will be the settlement date. If the contract is an instalment contract it will be the date the first instalment (other than a deposit) is paid.

    An online confirmation screen will be displayed once the form is submitted. You can print this from the screen. A confirmation email will also be issued automatically to the email address you or your representative has provided to us (if any). The confirmation will provide a unique payment reference number (PRN) and a lodgment reference number (LRN).You must keep this.

    The PRN and LRN will be required to lodge the second form, and the PRN is also used to make your payment.

    See also:

    Lodge form two

    You must complete a GST property settlement date confirmation online form (form two) once your withholding obligation becomes due.

    This is either:

    • when the first instalment is paid
    • at settlement
    • as soon as practical thereafter.

    Form two is used to confirm the settlement date. You must include the PRN and LRN you received when you lodged form one.

    If for some reason the contract is not completed, or if it is an instalment contract and you do not pay the first instalment, then you are not required to lodge form two. You also do not have to cancel form one if it has been lodged.

    See also:

    Who can complete and submit the forms

    A purchaser can authorise a representative to submit the forms on their behalf by giving them a signed declaration. Depending on the state or territory the property is located in, the purchaser's representative can include either a:

    • conveyancer
    • solicitor.

    Note: Conveyancers are not able to provide GST advice to their clients unless they are Registered Tax or BAS Agents.

    You can find more information about registered tax agents and BAS agents on the Tax Practitioner Board website.

    See also:

    Withholding amount

    Your supplier should notify you of the withholding amount by issuing the required notice.

    The amount you must withhold and pay to the ATO is generally either:

    • 1/11th of the contract price (for fully taxable supplies)
    • 7% of the contract price (for margin scheme supplies)
    • 10% of the GST exclusive market value of the supply (for supplies between associates for consideration less than GST inclusive market value).

    The contract price is the GST inclusive price of the supply as listed in the contract. The contract price may be varied by the parties before settlement. Normal settlement day adjustments should be disregarded (for example, adjustments to reflect apportionment of council rates or water rates).

    If, however, the contract includes non-monetary consideration (for example, land swaps) the withholding amount is calculated as a proportion of the monetary consideration (including GST), plus the GST inclusive market value of the non-monetary consideration.

    This is the 'price for the supply' in GST law.

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    Multiple properties in one transaction

    If you are acquiring multiple supplies of different kinds under a single contract for an unapportioned amount (for example, a supply that is partly a supply of new residential premises and partly a supply of commercial premises) you and your supplier should determine a reasonable apportionment of the amount so as to determine the proportion that relates to the supply to which the withholding obligation applies.

    If it is not practical to apportion the price, then the withholding amount should be based on the total price for the supply.

    Multiple suppliers

    If you are acquiring the property from more than one supplier your suppliers should notify you of each supplier's proportionate share of the withholding amount.

    This will ensure we correctly apply the withheld amount you pay us to each of your supplier's net GST amounts when they lodge their relevant business activity statements (BAS).

    If your suppliers don't notify you of their respective shares of the withholding amount then you may allocate them equal shares.

    Multiple purchasers

    If you are acquiring the property with other purchasers a separate withholding amount should be calculated for each purchaser depending on the way in which you intend to hold the property.

    Tenants in common – allows two or more purchasers to have an ownership interest in a property. Each owner has the right to deal with their interest separately. On the death or dissolution of an owner, the interest in the property does not automatically pass to the remaining owners. The total of the interests in the property must add up to 100%.

    If you are purchasing as tenants in common, you should treat each purchaser as a separate recipient. The withholding amount for each purchaser should be based on their proportionate ownership interest.

    Example 1: Multiple purchasers as tenants in common

    In this example there are three purchasers acquiring property under a standard land contract as tenants in common.

    Purchaser A is acquiring 25%, Purchaser B is acquiring 25% and Purchaser C is acquiring 50% of the property. The following applies:

    • for purchaser A the withholding amount = 25% × contract price × withholding rate
    • for purchaser B, the withholding amount = 25% × contract price × withholding rate
    • for purchaser C, the withholding amount = 50% × contract price × withholding rate.

    Each purchaser must withhold in proportion to their percentage of the total contract price and the supplier is required to notify them accordingly.

    End of example

    Joint tenants – each owner has an undivided 100% interest in the property and if an owner dies or corporate owner dissolves, the interest in the property passes to the remaining joint tenant(s).

    If you are purchasing as joint tenants, you will be jointly responsible for the withholding amount.

    Example 2: Multiple purchasers as joint tenants

    Where there are three purchasers acquiring property under a standard land contract as joint tenants the withholding amount is worked out as follows:

    Withholding amount = 100% × contract price × withholding rate.

    End of example
      Last modified: 07 Aug 2018QC 56253