A change to GST in the Budget will mean homebuyers will soon have to send the Australian Taxation Office a cheque for GST on new dwellings.
The changes come in mid-next year and the GST payment will need to be paid on newly built residencies and subdivisions upon settlement.
As it stands now the payment is made by developers when they lodge business activity statements and the Government appears concerned some of the revenue is being missed when developers go broke and don’t pay the GST.
The Government expects to reap around $650 million over four years and the move is attracting criticism from some.
“This seems an extraordinary figure and we will be seeking additional information from the ATO about how these changes will work,” Property Council of Australia’s Ken Morrison told Australian Financial Review.
“This will impact on the cash flow of thousands of builders and we want to see more details from the ATO.”
According to the AFR Treasury say the move targets ‘phoenixing’, which is when companies transfer assets from an indebted company to a new company to avoid paying creditors.
KPMG’s Kate Law expressed her uncertainty around the new measure.
“KPMG is not aware of industry consultation on this issue more recently, and we question the practicality and administrative cost of imposing GST on unregistered mum and dad purchasers,” she told AFR.
“Where developers use the margin scheme to calculate the GST liability, the purchaser is unlikely to be aware of the amount of GST included in the purchase price.”
“This measure will therefore require developers to change the way they disclose the price to ensure GST liability is disclosed as a separate line item.”