Developers risk fines if they fail to meet new GST law
GOLD Coast residential property developers risk fines of up to $105,000 if they do not comply with new GST laws in effect from next financial year, a Gold Coast lawyer is warning.
The laws concern how GST is paid on purchases of new residential premises.
“The changes are a response to developers failing to remit the GST to the Australian Tax Office from these property transactions,” Matthew Windle, partner at Gold Coast law firm MBA Lawyers, said.
“Developers need to be aware that these laws are about to change, and should prepare accordingly.”
Previously, developers received the full amount of the contract price at settlement and could effectively use the GST to maintain cash flow at the time.
They then paid the GST sometime later, generally when lodging their business activity statement.
Buyers of new residential property will now be required to withhold the GST from the contract price and remit directly to the ATO during the settlement process.
The laws require developers to notify buyers in writing at least 14 days before settlement regarding the GST and the time for payment to the ATO. Failure to do so could see a court-imposed fine of $21,000 for individuals or $105,000 for corporations, in addition to any administrative penalties.
New residential premises are now defined as:
• residential property not previously sold as such;
• property created through substantial renovations, or property that has been built to replace demolished premises on the same land;
• residential land that’s included in a subdivision plan, including land that could be used for residential purposes even though it may not initially be classified as such.
Developers will still be entitled to a credit from the ATO after reporting the actual GST liability on a transaction in their business activity statement.