Vendors and purchasers of land becoming unpaid tax collectors
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May 23, 2017
Vendors and purchasers of land becoming unpaid tax collectors
The 2017 Budget proposes significant administrative and cost burdens on vendors and purchasers of land, says the Australian Institute of Conveyancers (SA Division).
The 2017 Budget proposes significant administrative and cost burdens on vendors and purchasers of land, according to the Australian Institute of Conveyancers (SA Division).
The AICSA calls upon the Federal Government to reconsider the reduction in the foreign resident capital gains withholding threshold, down from $2 million to $750,000.
AICSA President, Mr Tim O’Halloran, said, “This change will affect every property sold over $750,000, every vendor will be required to obtain a clearance certificate from the ATO to ensure amounts are not withheld from their sale proceeds”.
“If the vendor fails to obtain a clearance certificate the onus falls on the purchaser to collect 12.5% of the purchase price and pay it to the ATO on behalf of the vendor – it simply isn’t fair!”
“Moreover, conveyances settling from 1 July will be subject to the new threshold, so vendors will need to start applying for clearance certificate’s now – it’s just more red-tape for industry and an additional burden and cost at a time when stress levels are already high.”
“Equally concerning is the introduction, from next year, for purchasers of newly constructed residential properties or new subdivisions to remit the GST directly to the ATO as part of settlement on behalf of the vendor developer,” said, AICSA CEO Rebecca Hayes.
“We question how a purchaser is expected to be aware of the GST liability where the developer is using the margin scheme, who will be responsible for payment of penalties when the wrong amount has been remitted?”
“Worryingly we consider this will potentially stop many purchasers from entering into contracts with developers for vacant land or new builds and we question what effect this will have on the building industry.”
“The government is simply pushing the full responsibility of tax collection on to the consumer and their conveyancer” said Ms Hayes, “In essence conveyancers and their clients are becoming unpaid tax collectors”.
Read more analysis of the 2017 Federal Budget:
Older apartments may become less valuable if budget depreciation changes get up
