History

The withholding obligation was announced in the May 2017 Federal Budget. The measure was introduced to ensure that payment of GST is not avoided by 'phoenixing' activity in the property sector involving property developers and vendors.

Phoenixing activity involves the use of insolvency to avoid the payment of debts, including taxes. ‘Phoenixing’ in the property development industry has grown significantly in recent years.

Paying GST at settlement will help prevent non-compliance by property suppliers who sell properties for a price that includes the GST and avoid remitting the GST to us. They may avoid tax by liquidating their businesses and restarting their business again under a different entity before their next activity statement lodgment.

Following Treasury consultation with key property industry and tax professional stakeholders, the new measure was introduced to Parliament into Schedule 1 of the Taxation Administration Act 1953 by Schedule 5 of Treasury Laws Amendment (2018 Measures No. 1) Bill 2018External Link. The bill received royal assent on 29 March 2018.

Return to:

• GST at settlement