Adjustment of property goods and Services tax in Australia in July (Domain Photo)
Industry experts have warned that Australia`s federal goverment is planning to plug billions of Australian dollars in tax loopholes and that prospective buyers and small developers could face more trouble, according to Domain.
New property transactions in Australia are subject to a commodity service tax (1 / 11 of the transaction price), which developers are responsible for paying to the Australian Inland Revenue Authority (Australia Tax Office).) after the transfer of the property is completed. However, illegal developers have taken the opportunity to end their operations or declare bankruptcy in an attempt to evade a $3 billion-a-year tax loss on goods and services.
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Starting July 1, paying the commodity service tax becomes the responsibility of prospective buyers. The key point is that the time of payment of the goods and services tax is changed to before the transfer of real estate.
Maroni (Peter Maloney), chief executive of GlobalX, the real estate agency, said that while the overall amount paid by prospective buyers remained unchanged in theory, prospective buyers must be aware that they would have to pay the extra money at the same time as a down payment.
Presley (Simon Pressley) of Propertyology, a real estate agency, said the need to accumulate enough extra cash in the early stages of buying a home could frighten prospective buyers.
In addition, developers may also require prospective buyers to pay more down payments as they need cash flows to support construction.
Maroni reminded prospective buyers to be advised to seek legal advice to ensure payment of goods and services taxes on time and to make sure that a viable payment plan was signed. If you forget to pay the goods and services tax, you may be fined by the Australian Inland Revenue Department.
Maroni believes the tax policy may have a wide impact on the Australian property development industry. There are two major sectors in the Australian real estate development industry, for large developers such as Mirvac, the adjustment of the commodity and service tax should not have much impact. But for thousands of other small developers, such as family developers, who invest in just one property, the adjustment in the goods and services tax will put a lot of pressure on their cash flow management.
