With the introduction of the new financial year, there was also an introduction of some new rules when it comes to property and property sales in Australia. First and foremost, the process for paying GST on properties was altered. Now, the onus is on the buyer rather than the seller.
If the property sale is subject to GST – the party purchasing the property must now keep the GST to pay to the ATO which is a two-step process as follows:
- Lodgement of GST property settlement withholding notification form upon the signing of a purchase contract.
- Lodgement of GST property settlement date confirmation form when a settlement date is confirmed.
Once the GST property settlement withholding notification is taken by the ATO, they will issue unique Payment Reference Number (PRN) and Lodgement Reference Number (LRN) by email within 24 hours.
One unique PRN will be issued per withholding notification form, even if multiple purchasers or suppliers are supplied on the form.
If you are the purchaser, your obligations are not complete until the GST property settlement date confirmation has been submitted and the withholding payment has been made. GST is then paid quoting the PRN which will allow the ATO to allocate the GST payment to each seller as per the forms lodged. The seller will report the GST as part of their BAS return Based on their reporting cycle. The GST liability reported will then be offset the payment made by the purchaser.
From the 1st July, 2018, any property sale over $750,000 requires a Clearance Certificate from the ATO. Otherwise, 12.5% of the sale price MUST be withheld. The Clearance Certificate confirms that you are a resident of Australia for Tax Purposes.
This has been around a while but it does still catch people out all the time. When a new name is to be placed or removed from a Property Title, that person must have their identity verified via a verification process through Australia Post. Whilst it is relatively straight forward complications do arise because:
- Original Documents are required in all circumstances; and
- If you have had a name change the documents relating to those changes are also required for example Marriage Certificates or Deed Poll Changes.
Please note this process can take time so if you are planning on buying property or being added to a title please be prepared in advance. Also, it is worth noting most certificates such as birth and marriage can now be obtained online at the births, deaths and marriage office in each state and territory.
If you are curious about these changes and think they may affect you, please feel free to get in touch with your Accountant at Marsh Tincknell on 3422 8000