Australia Warns On Real Estate GST Non-Compliance
The Australian Taxation Office said that it has noticed a number of common errors being made in activity statements since the “goods and services tax at settlement” system was introduced for the real estate industry in July 2018.
As of July 1, 2018, purchasers of new residential premises and new residential subdivisions are required to withhold GST on the purchase price at settlement and then pay it directly to the ATO. The legislation is intended to prevent tax evasion by property developers who fail to remit GST on sales of such property, a practice often associated with illegal phoenixing activity.
The ATO advised tax agents and their clients to ensure that they understand the reporting requirements and that they are correctly completing activity statements when reporting property sale information.
The ATO explained that the new law does not affect a supplier’s obligation to lodge their activity statement and to report their GST liabilities on taxable supplies.