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GST withholding for certain taxable supplies of property and the tax agent services regime

Conveyancers and GST withholding for certain taxable supplies of property

If you are a conveyancer, you may be aware that there have been law changes to relating to GST on certain property transactions starting on 1 July 2018.

You could be impacted by the Tax Agent Services Act 2009 (TASA) if your clients are affected by these law changes.

This means you may need to register with the Tax Practitioners Board (TPB) when assisting your clients to meet the requirements under this new GST withholding measure.
 

Changes to GST withholding

Under the new GST withholding requirements, the property transactions affected are supplies of new residential premises or potential residential land.

For taxable supplies of these types of property, instead of paying the full contract price to the GST registered supplier (vendor) at settlement, a purchaser is now required to withhold an amount from the contract price and pay that amount directly to the Australian Taxation Office (ATO).  

This law change does not affect the supplier's obligation to lodge their Business activity statement (BAS) and report their GST liabilities or entitlements on taxable supplies of these types of properties.

For more information, refer to the ATO's website


What does this mean for conveyancers?

Before assisting clients to meet the requirements of the new GST withholding requirements, all conveyancers who are not registered with the TPB as a tax agent or BAS agent need to understand what they can or cannot do under the TASA.

A conveyancer does not need to be registered with the TPB if the services provided do not meet the definition of tax agent service (which includes BAS service).

In general terms, tax agent services (or BAS services) relate to:

  • working out or advising about liabilities, obligations or entitlements of clients under a taxation law (or BAS provisions), or
  • representing entities in their dealings with the Commissioner of Taxation,

where the client can be reasonably expected to rely on the service to satisfy liabilities or obligations, or to claim entitlements, under a taxation law (or BAS provisions).

Therefore, services where registration with the TPB is not required include, for example:

  • data entry, providing the data entry does not require the interpretation or application of a taxation law
  • coding of transactions based on instructions provided by the client
  • merely transposing information from a standard land contract to the ‘GST Property Settlement Withholding Notification form’ and the ‘GST Property Settlement Date confirmation form’, and/or
  • transmitting the 'GST Property Settlement Withholding Notification form’ and/or the ‘GST Property Settlement Date confirmation form’ to the ATO.

In relation to the mere transmittal of the relevant forms, if your client asks you to complete and submit these forms to the ATO and you are not a registered tax agent, BAS agent or Australian legal practitioner, you need to make it clear to your client that you are only the transmitter of data to the ATO and not the provider of a tax agent service or BAS service.

Furthermore, you should advise that you can assist your clients with data entry only and you can undertake the following steps for them:

  • enter client-provided information from a hard copy form into the ATO’s online environment (for example, data entry)
  • transmit the information you have entered into the ATO’s online environment.

Importantly, to provide the above assistance, you need to have appropriate procedures/processes in place to ensure that you are not regarded as providing a tax agent service or BAS service. Such procedures/processes should include, amongst others:

  • provide a declaration to your client that they are required to sign advising that they authorise you to submit the two forms and that the information provided to you is true and correct. An example of a declaration is available on the ATO website .
  • you retaining, and providing to the client, a copy of the email confirmation that is sent out once the first form is lodged. This contains all the critical information submitted in the first form.  

The TPB also recommends that in these circumstances a conveyancer should have an appropriately worded declaration to make it clear to your clients that you are not a registered tax agent or Australian legal practitioner, and if the client is seeking tax related advice to rely on in order to meet their tax obligations, they should seek advice from a registered tax agent or Australian legal practitioner. Ultimately, your clients need to be aware that you are simply undertaking a data entry role or that you are simply the transmitter of data to the ATO and not the provider of a tax agent service or BAS service.


Last modified: 9 July 2018