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House of Cards

Dodgy Developers Dulled

Reading time: 1 - 2 minutes

It seems that dodgy developers and builders have ruined it for all.

And as such the way GST on construction is dealt with is changing.

Developers and builders are likely to experience tougher days ahead as cash flow starts to get tougher, with new GST laws to start on 1 July 2018 and a weakening confidence in the property sector.

From 1 July 2018, the obligation rests with the purchaser to pay the GST that the seller is charging directly to the ATO at the time of settlement. This applies where the purchase is of new constructed residential premises and new subdivisions.


The proposed changes are designed to stop "phoenix" activities by property developers who set up joint ventures/companies and then liquidate these entities once all property is sold and do not pay outstanding GST liabilities. The government is sick of missing out.

It is however still unclear exactly how this new system will work from a practical point of view, for either sellers and buyers.

The major issue is how the GST will be calculated and paid by the purchaser. Most developers would typically use the margin scheme (which results in GST being less than 10%) and get their accountant to calculate this on preparing the Business Activity Statement. If the full 10% is required to be withheld, builders and developers are going to be crunched cash flow wise and will need to fund the difference until they can recover it from the ATO.

The end result is that again businesses doing the right thing are going to be punished cash flow wise, and mum and dads have added complications when purchasing a home as they need to worry about the sellers GST obligations.

Basically more cost for no benefit.


GST and property is very complex.  And the ATO are not very flexible.
Don't mess up and have the house of cards crash. Contact Clifton Accountants now.

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