29 September 2011
The Federal Treasury has released an exposure draft of legislation designed to protect the GST revenue base and to ensure the law applies appropriately to supplies of new residential premises. The measure was announced in the 2011-12 Budget. The changes are a response to a court decision made last year.
The changes are designed to clarify and remove any doubt about the law. Under the proposed new law:
- Premises that become new residential premises because of substantial renovations or because they have been built to replace demolished premises, cease to be new residential premises once they are sold or supplied by way of long term lease as residential premises.
- The subdivision of existing residential premises that are not new residential premises does not result in the subdivided premises being new residential premises.
- The ˜wholesale supply of residential premises under certain arrangements is disregarded in determining whether the subsequent supply of the premises is a supply of new residential premises.
- The strata titling and grant of a strata lot lease over newly constructed residential premises does not of itself cause these premises to cease to be new residential premises and not subject to GST when sold to home buyers and investors.
The last three dot points are proposed to be backdated to 27 January 2011 (the date of the Governments policy announcement). The first dot point would apply from when the law actually commences (i.e. not retrospectively).
The draft law and explanatory material is available here. Submissions can be made until 21 October 2011.
