GST at settlement – a guide for suppliers and their representatives

Suppliers of new residential premises or potential residential land have certain tax obligations to receive their GST property credits. Suppliers must notify purchasers in writing as to whether or not they have a withholding obligation when they sell either:

• residential premises
• land that could be used to build new residential property (potential residential land) to a purchaser who is not a GST registered entity acquiring the land for a creditable purpose.

You must also determine if you are running an enterprise. Even a one-off property sale could mean you have a GST obligation.

See also:

• GST at settlement
• GST at settlement process
• Transitional arrangements end 30 June 2020
• Terms we use

Determine if you are running an enterprise

A supply of new residential premises or potential residential land in Australia is a taxable supply if you're registered or required to be registered for GST, and the supply is:

• made for consideration
• made in the course or furtherance of an enterprise you carry on
• not a GST-free or input taxed supply – for example, a supply made as part of a GST-free supply of a going concern or a supply of GST-free farmland.

If you're registered or required to be registered for GST and the supply is part of your business, GST at settlement may apply.

Generally, you aren't carrying on an enterprise if your property transactions are for private purposes, such as constructing or selling your family home.

Examples of an enterprise

Examples of activities that may be regarded as an enterprise include when you:

• buy property with the intention of immediate resale at a profit
• develop property to sell.

Even a one-off property transaction may be an enterprise.

You must register for GST:

• when your business or enterprise has a GST turnover (gross income minus GST) of $75,000 or more (or $150,000 for non-profit organisations)
• when you start a new business and expect your turnover to reach the GST threshold (or more) in the first year of operation
• if you're already in business and have reached the GST threshold.

 

Selling the family home

If you aren't carrying on an enterprise and not registered for GST (or required to be registered), you won't be making a taxable supply when you sell your family home.

See also:

• Property and registering for GST
• GST property decision tool
• Registering for GST
• Applying for an ABNExternal Link

Supplier notification

You must notify the purchaser in writing before settlement of whether or not they have a withholding obligation – this is called a 'supplier notification'.

You have a notification obligation if you supply a long-term lease or sell:

• residential premises
• land that could be used to build new residential property (potential residential land) to a purchaser who isn't a GST registered entity acquiring the land for a creditable purpose.

If the contract allows a purchaser to be substituted for another entity, or the supply is made to a nominee, you may provide the notice to the entity listed on the transfer documents.

The notification can be included in the sales contract or in a separate document before settlement. All law societies (except Northern Territory) have revised their standard land contracts to include the notification.

Note: If you fail to provide a written notice, penalties may apply.

For more information see Properties that are included and excluded.

What to include in a supplier notification

If your purchaser:

• doesn't have a withholding obligation – your notice must make it clear that 'no withholding is required'
• has a withholding obligation – your notice must include  
  • the name and Australian business number (ABN) of all suppliers
  • GST branch number (if applicable)
  • the amount they must withhold (rounded down to the nearest dollar)
  • when they must pay it to us
  • GST-inclusive contract price (plus the GST inclusive market value of non-monetary consideration).
   

If you don't supply the correct information, it may cause delays in the GST property credits being allocated into your GST property credit account.

Find out about:

• Name and ABN of all suppliers
• Calculating the withholding amount
• When the withholding is due
• Information in the supplier notification changes

Name and ABN of all suppliers

The supplier is the entity required to report the property transaction on their business activity statement (BAS) – that is the entity liable for the GST.

If there are multiple suppliers and they're all required to report the on their activity statement, the name and ABN of each supplier must be provided to the purchaser.

If you are:

• part of a partnership – include the partnership name and ABN
• a member of a GST group – one member of the group (the representative member) completes the activity statement and accounts for GST on behalf of the whole group  
  • provide the name and ABN of the representative member to the purchaser
  • check if the ABN is registered for GST on ABN LookupExternal Link to ensure the credit is allocated correctly.
   

Calculating the withholding amount

The amount provided should be a whole dollar amount. Round cents down to the nearest dollar.

Withholding amount

The amount a purchaser must withhold and pay to us (rounded down to the nearest dollar) is generally either:

• 1/11th of the contract price (for fully taxable supplies)
• 7% of the contract price (for margin scheme supplies)
• 10% of the GST exclusive market value of the supply (for supplies between associates for consideration less than GST-inclusive market value).

The contract price may be varied by the parties before settlement. Normal settlement day adjustments can be disregarded (for example, adjustments to reflect apportionment of council rates or water rates).

If the contract includes non-monetary consideration (for example, land swaps) the amount to be withheld needs to be calculated as a portion of the total monetary consideration (including GST) plus the GST inclusive market value of the non-monetary consideration.

This is defined in GST law as the 'price for the supply'.

When the withholding is due

The purchaser must make the withholding payment (rounded down to the nearest dollar) to us by the due date:

• under a standard land contract – the day of settlement
• under an instalment contract – the day the first instalment is paid.

If, your supply is to an associate for no consideration, your associate must pay the withholding amount on the day on you make the supply.

Information in the supplier notification changes

If the required information changes before or after settlement, you must provide a new notice to the purchaser. The purchaser needs to contact us to organise the forms to be amended or cancelled.

If the credit in the GST property credit account has been allocated to an incorrect supplier, submit a transfer request.

See How to submit a missing credit or transfer request.

See also:

• How to amend or cancel your forms
• Property and registering for GST
• Change in use of your property

Supplier credit and email confirmation

The credit for the amount withheld is allocated to your GST property credit withholding account. If there are multiple suppliers, the credit is the equivalent proportion of the withheld amount.

Viewing GST property credits

Once the purchaser has paid the withholding amount, it's credited to your GST property credit account. We send an email confirmation to the email address on your activity statement account. The email includes identifiers for the property transaction and confirms the credit has been received.

You can view the GST property credit account in:

• ATO online services for individuals and sole traders
• Online services for agents
• Online services for business.

To view the GST property credits account select:

• Activity statements in the menu
• GST property credits hyperlink on the Activity statement list screen.

Check the credits available before you lodge your activity statement.

If a credit isn't showing two weeks after settlement or you identify the credit has been allocated to the incorrect entity, you should contact us.

Find out How to submit a missing credit or transfer request.

What to report on your activity statement

The GST liability on the taxable supply remains with you. There are no changes to what you report on your activity statement.

Reporting

Report the taxable supply together with:

• any other supplies
• acquisitions
• GST liabilities
• GST input tax credits.

Completing your activity statement

You are liable for the GST of the property transaction in the period that settlement occurred. You need to report:

• label G1 Total sales – all property sales
• label 1A GST on sales – the actual GST on sales and account for the margin scheme if applicable
• label 1B GST on purchases – the total amount of GST credits (including any adjustments) the supplier is eligible to claim.

Don’t report the GST property credit on your activity statement.

After lodging your activity statement, a credit for the withholding amount is transferred from the GST property credit account into your activity statement account and can be applied against the net amount.

We will refund surplus credits from the activity statement account to you, subject to normal GST refund processes.

If you make an error on your activity statement, including incorrectly reporting or omitting property sale information, you must amend it to avoid penalties.

For more information see Completing your BAS for GST.

Margin scheme

The margin scheme enables GST to be calculated on a concessional basis. The rules depend on when a property was first purchased.

Only apply the margin scheme if the sale of a property is taxable and ensure it's written in the contract.

Generally, the GST is based on the difference between:

• the price the you paid for the property when you first purchased it
• the subsequent sale price of the property.

See also:

• GST at settlement
• Eligibility to use the margin scheme
• Methods to calculate the margin

Purchaser hands you the cheque for the withholding amount

Rather than pay the withholding amount to us directly, a purchaser may agree to give you a bank cheque to give to us, made out to the Commissioner of Taxation.

This means you're acting as the purchaser's agent. They must provide you with a GST withholding payment slip and payment reference number (PRN).

The purchaser won’t be discharged from their withholding obligation until you give us the cheque, although they will be protected from penalties.

When you make the payment to us, ensure you use the GST withholding payment slip and PRN.

If you don't supply these, it may cause delays in the GST property credits being allocated into your GST property credit account.

For more information see How to pay the withholding amount.

Purchaser's requirement to lodge Forms one and two

You can ask your purchaser to provide you with evidence they have lodged the forms (for example, a copy of the form lodged or a copy of the email from us).

You can choose to make this a contractual requirement.

You should view these details before settlement occurs to ensure changes aren't required. If changes are needed, provide the purchaser with a new notification.

Penalties can be applied against the purchaser if they fail to notify us they are required to withhold (that is, by not lodging the two online forms).

For more information see Compliance and penalties.

How to apply for a refund

If a purchaser withheld an amount in error and paid it to us, you may be able to seek a refund.

The amount that may be refunded is the amount that was withheld in error, which may be all or part of the amount paid by your purchaser.

How to submit a missing credit or transfer request

If a credit isn't showing on the GST property credit account after two weeks of settlement, check the following before contacting us:

• the purchaser has lodged the two online forms and made payment to us
• the correct supplier details were entered on Form one.

If the supplier details are correct and the purchaser has met their obligations, submit a missing credit request.

If the credit hasn't transferred from the GST property credit account into the integrated client account, check the following before contacting us:

• you submitted the activity statement for the relevant period. The property sale must be reported in the reporting period that settlement occurred
• if you submitted your activity statement within the last 24 to 48 hours. The transfer of credits can take up to 48 hours.

If you submitted your activity statement and it's been more than 48 hours and the credit hasn't transferred from the GST property credit account into your integrated client account, lodge a transfer request.

If the credits were allocated to an incorrect supplier, submit a transfer request.

Submit a missing credit request

You can submit your request via:

• Online services for businessExternal Link  
  • using Secure mail, complete the following  
    • select New message
    • select View more topics under Topic
    • select GST under Other topics
    • select GST at settlement under Subject
    • complete the required details
    • tick the declaration and send to us.
     
   
• Online services for agents  
  • Using the Mail option, complete the following  
    • select New message
    • select GST under Subject
    • select GST at settlement under Topic
    • complete the remaining fields and send to us.
     
   
• All mail messages should  
  • provide the reason of your enquiry
  • provide the following details for each missing credit  
    • supplier name the credit should be allocated to
    • supplier ABN the credit should be allocated to
    • the purchaser name (or names)
    • the credit amount
    • lodgment reference number (LRN) or payment reference number (PRN)
    • property details
    • settlement details
     
  • attach any supporting documentation.
   

Alternatively, phone us on 13 28 66 Fast Key Code 3 4.

Submit a transfer request

You can submit your transfer request via:

• Online services for businessExternal Link  
  • Using Secure mail, complete the following  
    • select New message
    • Select View more topics under Topic
    • Select GST under Other topics
    • Select GST at settlement under Subject
    • complete the required details
    • tick the declaration and send to us.
     
   
• Online services for agents

Using the Mail option, complete the following

• select New message
• select GST under Subject
• select GST at settlement under Topic
• complete the remaining fields and send to us.

All mail messages should:

• provide the reason of your enquiry
• provide the following details for each missing credit  
  • supplier name and ABN the credit is currently allocated to
  • supplier name and ABN the credit should be allocated to
  • what BAS period the credit relates too
  • branch number (if applicable)
  • the purchaser name or names)
  • the credit amount
  • lodgment reference number (LRN) or payment reference number (PRN)
  • property details
  • settlement details
   
• attach any supporting documentation.

Alternatively, phone us on 13 28 66 Fast Key Code 3 4.

Compliance and penalties

There are penalties for failing to provide a supplier notification to a purchaser.

For more information see GST at settlement – Compliance and penalties.

Resources

Law companion ruling

Law companion ruling LCR 2018/4 Purchaser's obligation to pay an amount for GST on taxable supplies of certain real property describes how we apply the law.

Legislation

Treasury Laws Amendment (2018 Measures No. 1) Bill 2018

Webinars

Watch:

• Webinar – GST at settlement – OverviewExternal Link
• Webinar – How to get GST right at settlementExternal Link
• Webinar – GST at settlement – Cutting through the complexitiesExternal Link
• Webinar – An update about GST at settlementExternal Link

Online forms and information

The following information is available to help you meet your obligations:

• GST at settlement
• GST at settlement process
• GST property settlement online forms and instructions
• GST at settlement – a guide for purchasers and their representatives
• GST and property
• GST and residential property
• GST and the margin scheme
• GST definitions

What you must do when supplying new residential premises or potential residential land to receive GST property credits.