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Changes to Legislation, Gst, Developer
28
Nov

SELLING A NEW HOME – changes to legislation

Are you a developer?

Legislation has changed in respect to the sale of new homes.
In addition to normal contract requirements, an off the plan contract must include:

  1. A completed disclosure statement;
  2. A draft plan prepared by a registered surveyor, and
  3. Other draft documents, as set out in the new clause 4A of the Conveyancing (Sale Land) Regulation 2017.

A purchaser can rescind the contract if the Disclosure Statement, draft plan or relevant prescribed documents are not attached to an off the plan contract exchanged on or after 1 December 2019.

If the new home is complete, these documents are not required. However, the following are mandatory documents for the sale of a new property or homes that are less than 6 years old:
1. A final occupation certificate from a building certifier; and
2. Home Owners Warranty (HOW) insurance.

GST WITHHOLDING

Changes to the way GST is dealt with in respect to new homes were introduced on 1 July 2018.

If the vendor is registered for GST, the sale is a taxable supply and the property is a new residential property – then the GST withholding requirements apply.

The GST withholding requirements put an obligation on the purchaser to pay the GST component of the sale price directly to the Australian Taxation Office (ATO).
This payment is required on the day of settlement.

In order to make the payment:

  1. The vendor’s solicitor will provide the purchaser’s solicitor with the necessary information;
  2. The purchaser’s solicitor must then notify the ATO with the provided information; and
  3. The ATO will provide the purchaser’s solicitor with a unique payment reference number. This number is used to make the payment to the ATO on settlement.

On settlement and payment of the GST Withholding tax, the ATO will issue a receipt to the vendor. The vendor can claim a credit for this payment when they lodge their next business activity statement.

Do you have questions? Our blog GST law changes for the purchase of new residential properties is a must read. If you need more information, or require some advice about your unique situation, give us a call.