In the evolving landscape of Queensland real estate, staying ahead of contract changes is vital for a smooth settlement. One of the most significant shifts in recent years involves how Goods and Services Tax (GST) is handled during the sale of property.

Under the current REIQ contracts, the responsibility for remitting GST has shifted in specific scenarios. At Loyal Keeper Group, we believe in empowering our clients with the knowledge to navigate these requirements with confidence.

What is GST Withholding?

Traditionally, a seller would receive the full purchase price at settlement and then remit the GST portion to the Australian Taxation Office (ATO) in their next Business Activity Statement (BAS).

However, to ensure GST is collected efficiently, the law now requires buyers to withhold the GST amount from the purchase price at settlement and pay it directly to the ATO.

When Does It Apply?

It is important to note that GST withholding does not apply to every transaction. It specifically targets:

• New Residential Property: Homes or apartments that haven’t been sold as residential premises before.

• Vacant Land: Land intended for new residential builds or subdivisions.

• Potential Residential Land: Land sold by GST-registered developers that could be used for residential purposes.

Rule of Thumb: If you are buying or selling an established residential home (a "second-hand" house), GST withholding generally does not apply.

Key Responsibilities

The REIQ contract includes specific sections to address these obligations, ensuring transparency for both parties.

For Sellers:

The law places a "Notification Obligation" on the seller. You must provide a written notice to the buyer (often included within the REIQ contract schedule) stating whether they are required to withhold GST.

• Failure to notify can result in significant penalties from the ATO, even if the sale itself wasn't subject to GST.

For Buyers:

If the property is subject to withholding, you (or your legal representative) must:

1. Lodge two online forms with the ATO (Form 1 before settlement and Form 2 after).

    

2. Withhold the required amount—usually 1/11th of the purchase price or 7% if the "Margin Scheme" applies.

    

3. Ensure the payment reaches the ATO at or before settlement.

Why This Matters for Your Settlement

While this sounds technical, the practical impact is mostly administrative. For buyers, it isn't an extra cost; it is simply a portion of the agreed purchase price being diverted to the ATO instead of the seller's bank account.

For sellers—particularly developers—this change impacts cash flow, as you no longer hold the GST funds until your next tax lodgment.

How Loyal Keeper Group Supports You

At Loyal Keeper Group, we work closely with your solicitors and conveyancers to ensure all REIQ contract boxes are ticked correctly from day one. Whether you are a developer launching a new project or a buyer looking at a fresh build in Logan, we ensure these tax obligations are identified early to avoid any settlement day surprises.

Are you planning to sell a new build or purchase land for your next project?

Reach out to our team today. We can help you understand how these rules apply to your specific property and ensure your transition is seamless.

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