Purchasers of 'new residential premises' must now remit GST on behalf of developer
In a bid by the Federal Government to tackle some issues of non-compliance with GST laws by the property development industry, purchasers of 'new residential premises' or 'new residential subdivisions' must now remit the GST component of the purchase price directly to the Australian Taxation Office (ATO).
The Government hopes this will help stamp out the practice known as 'phoenixing', where a developer collects GST on the purchase price of a property (a taxable supply) but dissolves the collecting entity before their next Business Activity Statement is lodged to avoid remitting the GST.
The ATO has estimated that the practice of 'phoenixing' has resulting in the loss of $2 billion in taxation revenue for the 2015/2016 tax year.
Read our full update here.
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