GST sting for purchasers buying under instalments

Discussion in 'Accounting & Tax' started by Mike A, 30th Mar, 2018.

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  1. Mike A

    Mike A Well-Known Member

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    As many are aware new laws are in place from 1 july 2018 where the purchasers of new residential property are required to submit the GST payable directly to the ATO.

    The vendor has reporting obligations to the purchasers as to whether they have any withholding obligations.

    Now for the sting !! What if the purchaser enters into an instalment contract with the vendor.

    The measure requires the purchaser to pay the GST to the ATO on or before the day the consideration for the supply is first provided.

    This means the purchaser will be liable for GST on the entire sales contract price when the first instalment is made. Will be important for those purchasing under an instalment system to be aware of this for cashflow planning.

    Paragraphs 5.19 and 5.20 of the Explanatory Memorandum make it clear that this is how it works
     
    Mike A, 30th Mar, 2018
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