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Investment Advice2018-07-13T13:37:45+00:00

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Investment Advice

Changes to GST on property developments

Back in May 2017 when the 2017-2018 Budget was announced, the government made a decision to introduce new GST withholding legislation on property developments to strengthen compliance with GST law. On 29 March 2018, the amendment to the GST laws received Royal Assent with the legislation due to take effect from 1 July 2018. Changes to GST on Property Developments Back in May 2017 when the 2017-2018 Budget was announced, the government made a decision to introduce new GST withholding legislation on property developments to strengthen compliance with GST law. On 29 March 2018, the amendment to the GST laws received Royal Assent with the legislation due to take effect from 1 July 2018. The new obligations apply for new residential developments, new residential subdivisions and long-term leases, and will have a significant impact on the property sector. Extending beyond property developers and purchasers to include lawyers, conveyancers and financial institutions to name a few. Why the need to amend the legislation? The current process for property developments is that vendors collect GST on property transactions at settlement and remit it to the ATO as part of their business activity statement process. However, some developers have failed to remit the GST to the ATO despite claiming GST credits on their construction costs. With growing concern from the Federal Government regarding “pheonixing”, which involves developers collecting GST on sales and then dissolving or declaring bankruptcy before remitting GST to the ATO, resulting in unrecoverable receipts. The Government suggests that

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