Any legislation involving tax is complicated, but here’s a brief explanation as to what the new rules mean.
Under the rules, every seller must give the buyer notice of whether the buyer is required to withhold GST at settlement.
Failure to give that notice could result in a penalty, whether GST is withheld or not. The GST must be withheld on taxable supplies of new residential premises and potential residential land.
Where the buyer is required to withhold GST at settlement, the buyer must complete the online forms and withhold that amount at settlement. The amount withheld will, in most cases be 1/11th or 7 per cent of the contract price, depending on whether the margin scheme is applied.
The buyer must pay the withheld amount to the Australian Taxation Office, otherwise they could also be liable to pay a penalty.
This blog post is not legal advice and each buyer and seller should consult their solicitor or conveyancer for help with these matters.