Govt releases draft property transaction GST legislation
Tax evasion through phoenixing arrangements that sees goods and services tax (GST) cashed in by developers who bypass the Australian Taxation Office (ATO) is forefront in the Government’s publicly-released draft legislation on property transactions.
The draft legislation, to be developed to increase integrity within GST property transactions, was announced in the 2017-2018 Federal Budget and will seek to close loopholes in which developers collect GST from customers and ‘dissolve’ their company to avoid taxation.
Minister for revenue and financial services, Kelly O’Dwyer said legislative measurements would ensure the correct amount of GST was handed across the ATO and help end compliance issues for the department.
“It will clamp down on this type of tax evasion by unscrupulous businesses and level the playing field for developers who do the right thing,” she said.
“This legislation adds to the comprehensive package of reforms to address phoenixing announced by the Government earlier in the year.
“Currently, developers can have up to three months to remit GST after the sale of newly constructed residential premises and new subdivisions, allowing dishonest developers time to phoenix and avoid their GST obligations.”
A two-year transitional arrangement has been suggested meaning contracts entered into before 1 July 2018 will not be affected, providing transaction settles before the start of the 2020-2021 financial year.
The draft legislation will be available for public feedback and consultation and amends the GST law from 1 July next year.
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