By Diane Skapinker -
Snapshot
- The 2018 edition of the NSW contract for sale and purchase of land includes a process to assist practitioners in dealing with the new ‘GST at settlement’ regime which commences on 1 July 2018.
- This regime requires purchasers of ‘new residential premises’ or ‘potential residential land’ to withhold an amount from the purchase price on account of the vendor’s GST liability and remit it, on or before settlement, directly to the ATO.
- The vendor is entitled to a credit for GST withheld for the amount paid to the ATO by the purchaser when the vendor’s net amount is assessed on the vendor’s GST return.
As legal practitioners are aware, the foreign resident capital gains withholding (‘FRCGW’) regime under the Tax and Superannuation Laws Amendment (2015 Measures No. 6) Act 2016 (Cth) requires purchasers of land and interests in land from foreign resident vendors to withhold from the purchase price an amount on account of the vendor’s capital gains tax liability and remit that amount to the Australian Taxation Office (‘ATO’). The FRCGW was the driver behind the 2016 and 2016/2017 editions of the NSW contract for the sale and purchase of land.
The need for a 2018 edition (‘2018 Edition’) has similarly been largely driven by the passage of the Treasury Laws Amendment (2018 Measures No. 1) Act 2018 (Cth) (‘2018 Act’). This legislation introduces new Subdivision 14-E (GST payable on taxable supplies of certain real property) in Schedule 1 to the Taxation Administration Act 1953 (Cth) (‘TAA’) from 1 July 2018. (Unless otherwise stated, references to legislation in this article are to Schedule 1 to the TAA.)
The other changes in the 2018 Edition are summarised on the ECOS portal and the Law Society website.
