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  • Withholding amount

    The amount a purchaser must withhold and pay to us 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 can 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 amount to be withheld by your purchaser needs to be calculated as a proportion of the sum of the monetary consideration (including GST) plus the GST inclusive market value of the non-monetary consideration.

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

    On this page:

    Multiple properties in one transaction

    If you are making 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 purchaser should determine a reasonable apportionment of the amount to determine the proportion that relates to the supply to which the withholding obligation applies.

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

    Multiple suppliers

    If you are jointly supplying the property, your supplier notification must contain the name and ABN of all of the suppliers included in the transaction, as well as the withholding amount that is to be applied against each supplier's proportion of the GST liability for that taxable sale.

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

    If you don't notify your purchaser of your respective shares of the withholding amount then they may allocate you equal shares.

    Multiple purchasers

    If you are making a supply to more than one purchaser you may need to calculate a withholding amount for each purchaser.

    If your supply is by way of sale, you will need to know how your purchasers' 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%.
    • 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 tenants.

    If your supply is by way of sale to purchasers acting as tenants in common, you should treat each purchaser as a separate recipient. You should calculate the withholding amount for each purchaser 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

    If your supply is by way of sale to joint tenants, your purchasers 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 56252