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  • How the measure will work from 1 July 2018

    Step 1: Supplier notification

    Unless the purchaser has been notified in writing as to whether or not there is a requirement to withhold, a supplier must not supply, by sale or long-term lease, either:

    • residential premises (new or old, not being commercial residential premises such as hotels or motels), or
    • potential residential land to a purchaser who is not a registered entity acquiring the land for a creditable purpose.

    If the purchaser does have a withholding obligation then the supplier must notify the purchaser of:

    • the amount they must withhold
    • when they must pay it to us
    • certain other particulars such as the supplier's name and ABN.

    See also:

    Step 2: Lodge form one

    If there is a withholding obligation then there are two online notification forms which the purchaser or their representative is required to submit:

    Note: A purchaser can authorise a representative to lodge one or both forms on their behalf by providing the representative with a signed declaration.

    Form one: GST property settlement withholding notification online form is the first form that is required to be lodged with us.

    The form can be lodged at any time after the contract has been entered into and up until the due date for payment of the withholding amount.

    Once the form is submitted an online confirmation screen will be displayed. A confirmation email will be issued automatically to the purchaser's (or their representative's) email address (if provided), or can be printed from the screen. The confirmation will provide a unique payment reference number (PRN) and a lodgment reference number (LRN).

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

    Step 3: Lodge form two and pay

    Form two: GST property settlement date confirmation online form is to be lodged on or before the date of settlement. The purchaser or their representative must notify us (using the PRN and LRN) confirming property settlement date. This form is to confirm that settlement has occurred.

    Payment can be made using the PRN, the purchaser will pay the withheld amount directly to us. The purchaser will receive an email confirmation once the payment is processed in their withholding account, as proof of payment for their records.

    When we have processed the purchaser’s withholding payment, we will notify the supplier by email of the GST property credit amount and the related property settlement. This is subject to the supplier having recorded an email address for their activity statement account.

    A supplier can update their details online:

    Step 4: Business activity statement (BAS)

    The fact that a purchaser has a withholding obligation does not alter the supplier's obligation to lodge their Business activity statement (BAS) and report their GST liability (if any) in respect of the supply.

    Once the supplier has lodged its BAS, the supplier will receive a credit for the amount the purchaser has withheld and paid to us.

    Examples of withholding at settlement

    Example: Withholding at settlement – new residential premises

    BuildCo has developed an apartment block and is making taxable sales of new residential premises. The margin scheme does not apply.

    On 14 September 2018, Kath enters into a contract for the purchase of a new apartment from BuildCo for a contract price of $900,000 and pays a 10% deposit of $90,000. As the margin scheme does not apply, Kath has a withholding obligation of 1/11th of $900,000 ($81,818).

    Kath authorises her conveyancer to lodge the withholding forms on her behalf by providing her with a signed declaration.

    The contract of sale incorporates the withholding notification that BuildCo is required to be provided to Kath. Kath's conveyancer uses the information in the notification to complete the GST property settlement withholding notification (Form one) online and she obtains a PRN and LRN.

    Settlement occurs on 25 November 2018. At settlement, Kath's conveyancer:

    • lodges the GST property settlement date confirmation (Form two) using the PRN and LRN
    • pays the balance of the apartment purchase price to BuildCo of $728,182 ($900,000 less $90,000 deposit less $81,818 GST)
    • pays the withheld amount of $81,818 to us electronically.

    BuildCo lodges their quarterly October to December business activity statement (BAS) reporting the full sale price at Label G1 and the GST payable at Label 1A. When the BAS is processed, BuildCo receives a credit of $81,818 representing the amount withheld and remitted by Kath.

    End of example

     

    Example: Withholding at settlement – potential residential land

    On 10 September 2018, LandCo discovers that the local council has recently made changes to its by-laws to allow for smaller lots in the area. To take advantage of the by-law change, LandCo purchases a vacant block of land with the intention of subdividing it into two lots. The block is zoned to allow residential use and does not contain any buildings.

    LandCo registers the plan of subdivision and proceeds to make taxable supplies of both lots of vacant land.

    On 25 September Landco enters into a contract to sell one of the lots to Nick for $770,000 and Nick pays a 10% deposit of $77,000 with the balance due at settlement. As the sale is not under the margin scheme and Nick is not carrying on an enterprise, Nick has a withholding obligation of $70,000 (1/11th of $770,000).

    LandCo incorporates its withholding notification into the contract. This information enables Nick's solicitor to complete the GST property settlement withholding notification (Form one) online and obtain a PRN and LRN. Nick has provided his solicitor with a signed declaration authorising him to lodge the withholding forms on his behalf.

    Settlement occurs on 21 November 2018. At settlement, Nick's solicitor:

    • lodges the GST property settlement date confirmation (Form two) using the PRN and LRN
    • pays the balance of the purchase price to BuildCo of $623,000 ($770,000 less $77,000 deposit less $70,000 GST)
    • pays the withheld amount of $70,000 to us using BPAY.

    LandCo lodges their quarterly October to December Business activity statement (BAS) reporting the full sale price at Label G1 and the GST payable at Label 1A. When the BAS is processed, LandCo receives a $70,000 credit for the amount withheld and remitted by Nick.

    End of example
      Last modified: 08 Aug 2018QC 55431