Latest advice and guidance for conveyancers calculating the withholding amount of GST.
The ATO is sharing several need-to-know reminders through the Australian Conveyancer as the sector heads towards June 30.
With a raft of new firms being set up by entrepreneurial conveyancers before the end of the financial year, it is timely advice for those getting to grips with the dos and don’ts of withholding GST.
When GST at settlement applies to the sale of new residential premises or potential residential land, the purchaser must pay both the:
- withholding amount of GST to the Australian Taxation Office (ATO)
- balance of the contract price of the property (minus the withholding amount) to the supplier.
If you’re representing the purchaser, the GST amount you need to withhold and pay to the ATO will be either:
- 1/11th of the contract price (for fully taxable supplies)
- 7% of the contract price (for margin scheme supplies)
- 10% of the GST exclusive market value of the supply (for supplies between associates for consideration less than GST-inclusive market value).
For contracts that include non-monetary consideration (for example, land swaps), see price of the supply for calculating the withholding amount.
When calculating the withholding amount, round it down to the nearest whole dollar and enter this exact same amount in both GST property settlement forms you lodge for the purchaser:
- Form one: GST property settlement withholding notification which outlines the expected settlement date, property details and GST withholding amount.
- Form two: GST property settlement date confirmation contains the details of the settlement date and makes the payment to the ATO.
Check out the ATO’s website for examples of withholding at settlement or visit their website for more information about paying the withholding amount of GST.
