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Purchasers will have to withhold GST on the purchase price of new residential premises and new residential subdivisions, and remit it directly to the Australian Taxation Office (ATO), as part of settlement from 1 July 2018.

The government has introduced legislation as part of its aim to strengthen compliance with GST law in the property development sector.

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, said this measure will address tax evasion through phoenixing arrangements, where developers collect GST from their customers but dissolve their company to avoid paying it to the ATO.

“Currently, developers can have up to three months to remit GST after the sale of newly constructed residential premises and new subdivisions, allowing dishonest developers time to phoenix and avoid their GST obligations. 

“This measure clamps down on dishonest developers and levels the playing field for developers who pay the right amount of tax.”

The measure has a two-year transitional arrangement to provide certainty for existing contracts. Contracts entered into before 1 July 2018 will not be affected as long as the transaction settles before 1 July 2020.

The Bill and supporting materials are available on the Australian Parliament House website.