The Goods and Services Tax (GST), effective from 1 July 2000, applies to certain types of property transactions. However, generally, GST does not apply to existing residential land sales and purchases.
The residential properties that can attract GST are those properties that:
• have not previously been sold as residential premises;
• have been created by a substantial renovation of a building; or
• have been built to replace demolished premises on the same site.
If you have an issue with the GST (and this area can be very complex where property is concerned) it is strongly recommended that you obtain professional advice from someone qualified in tax or law who is competent to advise on GST.
Since 1 July 2018, if GST applies to the sale of a residential property, the buyer may be required to withhold the GST and pay it to the Australian Taxation Office at settlement. A vendor’s solicitor or conveyancer should advise a buyer if they are required to withhold GST. Conveyancers usually ask for written advice from the buyer’s accountant. A buyer can be penalised for not withholding GST.