Effective July 1, 2018, there will be changes to the GST legislation and the way residential land including land subdivision transactions occur.
The changes have been implemented in order to ensure GST is properly paid when buying and selling land. This is an effort by the government to stop or minimise impact of techniques (such as phoenixing vendor entities) aimed at avoiding payment of GST.
For eligible transactions, GST payment is now due on settlement and although the seller must notify the buyer of their GST liability, the buyer is responsible for remitting the GST payable directly to the ATO.
All transactions entered into on or after July 1, 2018, in respect of residential land will be subject to this change, however, certain transitional arrangements will exist if the contract is entered into before July 1, 2018, and settlement occurs before July 1, 2020.