GST and small business

GST and property transactions

When will you get credits?

To ensure you can receive GST input tax credits on time, as part of the property settlement process, you should ensure that the supplier details you provide to the purchaser in your notification are correct. If you get the details right at the time of settlement, this will help avoid delays in the processing of your credits by the ATO.

Providing details to the ATO that are not quite correct can delay you accessing your credits and may require the ATO to validate your details.

To ensure timely processing, the ATO has detailed the following 6 steps to follow:

Step 1: provide correct Supplier details to the purchaser

Step 2: purchaser to enter Supplier details into Form 1 GST Property Settlement Withholding notification

Step 3: purchaser to pay the withholding amount and lodge Form 2 GST Property Settlement Date confirmation

Step 4: ATO to allocate a credit to the Supplier GST property credits account if this matches the details provided in Form 1

Step 5: Supplier to lodge a BAS declaring the property transaction

Step 6: ATO to process BAS and transfer credits to Supplier Activity Statement account.

Changes to GST settlement for residential property – can you apply the margin scheme?

New legislation affecting GST on purchases of new residential premises and potential residential land started to apply from 1 July 2018. The new legislation requires purchasers of certain land to withhold an amount from the purchase price and instead remit this amount to the ATO.

If you are in business and registered for GST and you are selling new residential premises or potential residential land, you may be able to apply the GST margin scheme to your sale.

If the margin scheme applies to your sale, you must notify the purchaser of the withholding amount to ensure the purchaser withholds the correct amount. The withholding amount is 7% of the contract price (cents are not included).

The new legislation has not changed the way the margin scheme applies or operates, including business activity statement (BAS) reporting. All property sales continue to be reported at label G1 and the GST on sales reported at label 1A on your BAS.

Do you make any GST-free sales?

Do you sell food? Do you supply education? Do you provide medical services? Do you sell any of the products and services in the list below?

  • Most basic food
  • Some education courses, course materials and related excursions or field trips
  • Some medical, health and care services
  • Some menstrual products (from 1 January 2019)
  • Some medical aids and appliances
  • Some medicines
  • Some childcare services
  • Some religious services and charitable activities
  • Supplies of accommodation and meals to residents of retirement villages by certain operators
  • Cars for disabled people to use, as long as certain requirements are met
  • Precious metals
  • Farmland
  • Exports

If so, some of the products and services you sell may be GST-free. This means, you don’t need to charge GST on them and you can still claim any input tax credits you may be entitled to.

To do!
If you are not sure whether you should be charging GST on the goods and services you sell, check with your tax adviser or look at this page for further links and information – When to charge GST (and when not to)

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