6 years ago
CLAMPING DOWN ON TAX EVASION
Kelly O’Dwyer MP
The Government has today introduced legislation that delivers on its 2017-18 Budget commitment to strengthen compliance with GST law in the property development sector.
Under the new arrangements, purchasers will withhold the GST on the purchase price of new residential premises and new residential subdivisions, and remit the GST directly to the Australian Taxation Office (ATO) as part of settlement.
The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, said these changes will prevent tax evasion by unscrupulous property developers that fail to remit the GST on sales of new residential premises and new subdivisions, despite having claimed GST credits on construction costs.
This failure to remit GST is often associated with ‘phoenixing’ – where a developer dissolves their business and sets up a new entity to avoid remitting the GST to the ATO.
“This measure clamps down on dishonest developers and levels the playing field for developers who pay the right amount of tax,” Minister O’Dwyer said.
“The Government has consulted with industry to develop legislation that effectively addresses this type of tax evasion while minimising compliance impacts on industry and purchasers,” the Minister added.
The measure has a two-year transitional arrangement to provide certainty for existing contracts. Contracts entered into before 1 July 2018 will not be affected by this change as long as the transaction settles before 1 July 2020.
This schedule is part of a broader package of Turnbull Government initiatives to strengthen tax integrity to ensure all entities pay the right amount of tax.
These measures include tackling GST fraud in the precious metals industry, improving the integrity of small business capital gains tax concessions, toughening the multinational anti-avoidance law, introducing the diverted profits tax and tightening the thin capitalisation rules.
The Treasury Laws Amendment (2018 Measures No.1) Bill, also contains measures to:
[if !supportLists]• [endif]make regulatory improvements to Treasury portfolio legislation including in superannuation and corporations law,
[if !supportLists]• [endif]extend tax relief for merging superannuation funds until 1 July 2020,
[if !supportLists]• [endif]provide ongoing funding to the SuperStream Gateway Network Governance Body, and
[if !supportLists]• [endif]transfer the regulator’s role for early release of superannuation benefits on compassionate grounds, from the Department of Human Services to the Australian Taxation Office.