Five things you need to know about the new GST at settlement measure

The new GST at settlement measure refers to the new obligation on a purchaser of new residential premises or potential residential land to withhold an amount from the contract price and pay that amount to the Australian Taxation Office on settlement. However the new notice requirement affects all residential sales. Here are five things to keep in mind:

1. Generally, the measure applies to contracts entered into from 1 July 2018. Under the transition rules, if the contract was exchanged before 1 July 2018 and consideration for the sale, other than a deposit, is made before 1 July 2020, the new measure does not apply.


2. A vendor of residential premises or potential residential land must give a written notice to the purchaser as to whether or not the new measure applies to the sale. The vendor must give this notice for ALL residential premises, not just new residential premises. So even for the sale of an existing residence, this first notice from the vendor is required. This requirement is satisfied by a new tick-a-box on page 2, in the Tax information section, of the 2018 edition of the Contract for the sale and purchase of land.


3. Where the measure does apply, the vendor must notify the purchaser of certain particulars under section 14-255(1)(b) of Schedule 1 to the Taxation Administration Act 1953 (Cth). This requirement is satisfied by the completion of a new section on page 2 of the 2018 edition of the contract, “RW payment (residential withholding payment) – further details”.  Where a property is sold at auction, the amount the purchaser must withhold won’t usually be inserted on page 2. In that case, the vendor must provide all the details in a separate notice to the purchaser within 14 days of the contract date.


4. The purchaser is required to complete two online notification forms to the ATO:

   • After exchange, the GST property settlement withholding notification form,  to provide particulars of the transaction and obtain a  lodgment reference number (“LRN”) and payment reference number (“PRN”) which are used to identify the payment when made.

   • Once settlement has occurred, the GST property settlement date confirmation form, to confirm settlement has taken place.

5. In most cases, the amount to be withheld under the measure will be 1/11th of the contract price. However if the margin scheme applies, the amount to be withheld is 7% of the contract price. Note also that where the supply is between associates and is without consideration, or is for consideration that is less than the GST inclusive market value of the supply, the amount to be withheld is calculated as 10 per cent of the GST exclusive market value of the supply.

For further information about the GST at settlement measure see here and LCR 2018/D1 Purchaser's obligation to pay an amount for GST on taxable supplies of certain real property, on the ATO’s website in the legal database section.

For further information about changes made in the 2018 edition of the contract for the sale and purchase of land, see here.