GST changes for property
After July 1 2018 buyers of new residential houses, apartments and land blocks will be responsible for making sure the GST on their purchase is paid to the ATO as part of the settlement process. This GST will not be an additional cost to buyers, it’s already part of any contracted purchase, but prior to now this process has been completed by the developer.
The new system is part of a federal crackdown on tax evasion in the property development sector, and it’s one of the biggest changes to GST collection in property since the tax came into play almost two decades ago.
Chief executive of the Property Council of Australia, Ken Morrison, said that although the majority of developers did the right thing with GST, this process was necessary to catch the remainder.
“The overwhelming majority did the right thing and passed the GST they collected through to the ATO, but this measure has been introduced to deal with the minority who didn’t through so-called ‘phoenixing’.”
This new process does mean additional steps in the settlement process for buyers of residential property. This will include submitting forms to the ATO and separating the GST portion of a property purchase price.
It’s thought the changes will affect up to 70,000 transactions per year. The Property Council recommends buyers discuss the process with their solicitor or settlement agent after July 1. There is a contingency plan in place for buyers who purchased property before July 1, but will settle after it.
From July 1 those aged 65 or over will be able to pay $300,000 from the sale of their family home into superannuation accounts. This ‘downsizing contribution’ will not count towards contributions caps and can still be made if an individual has a total super balance greater than $1.6 million.
The contribution can only be made on the sale of one home, isn’t tax deductible and will be taken into account for determining eligibility for the age pension.
First home voluntary super contribution
The voluntary contributions first home buyers have been making into their superannuation will be able to be accessed from July 1. This scheme came into play a year ago, with a limit of $15,000 for individuals and $30,000 in total for a property.
The buyer must either live, or intend to live, in the premises as soon as practicable and live there for at least six months of the first 12 months. The buyer also needs to be over 18 years old to access the funds.
No glasses in passport photos
If you’re about to get a new passport be aware that as of July 1, glasses will not be allowed in passport photos. The Australian Passport Office has said this is to “further strengthen the integrity of the Australian Passport” and will boost passport facial matching.
The APO website states that glasses may be worn for valid medical reasons including severe light sensitivity or recent eye surgery, but vision impairment alone was not sufficient for medical exemption. If glasses must be worn for medical reasons, the frames “must not obscure the eyes and there must be no reflection from the lenses”.
Improved credit scores
Comprehensive credit reporting (CCR) will be mandatory from July 1, meaning banks will be forced to share all financial history with other lenders – both negative and positive.
The CCR has been in place since 2014, but the big four banks have refused to take part. Treasurer Scott Morrison has now ruled they have to be involved, meaning most Australians are likely to see an improved credit score.
Under the new system lenders will have to share positive information, such as when you made all your repayments on time, alongside the negative information currently shown.
The government’s beleaguered seven-year tax plan will come into play from July 1, giving Australians modest tax relief in the form of either an annual lump sum offset or increased tax brackets.
The plan looks to ward off bracket creep, whereby inflation pushes taxpayers into higher tax brackets.
Single touch payroll
Employers with 20 or more staff will change the way they report payments such as salaries, wages, PAYG withholding and superannuation from July 1.
This information will now need to be reported directly from an employer’s payroll or accounting software as part of the Single Touch Payroll system which gives the ATO near-real time visibility of an employee’s payments.
The process aims to improve visibility and give employers less room to hide when it comes to honest payment of workers. Last year, the ATO revealed employees missed out on $2.85 billion of their super guarantee payments during in 2014-15, with small businesses the worst offenders.
State by state
The government’s Additional Foreign Acquirer Duty (AFAD) will increase from July 1 – from the current three per cent to seven per cent. It affects foreign individuals, corporations and trusts and acts as a transfer trust for those looking to purchase Queensland property.
A new land tax category will affect holdings over $10 million from July 1. Individuals will be charged 2.25 per cent on their holdings. Trusts, companies or absentee landlords will be charged 2.5 per cent.
First Home Owner’s Grant will be decreasing in Queensland from July 1. FHBs will now be entitled to just $5000, down from $15,000 to build new homes.
Council rates are set to rise, with the Sunshine Coast seeing the worst at 3.5 per cent, followed by Ipswich at three per cent. Utility costs will also go up – Greater Brisbane is expected to pay up to two per cent more. This is on top of water and sewerage increases – up to 7.3 per cent in some areas.
Luxury car lovers and fans of mobile homes are also set to pay a new two per cent tax. The tax will affect vehicles sold for more than $100,000, excluding caravans, and will raise $103 million for the state over the next four years.
New South Wales
Econveyancing is set to replace all paper and manual processes in property transactions from July 1. This still stands despite calls to push the date back with the latest PEXA scandal.
Infrastructure levy caps are set to be increased locally to $40,000 for greenfield areas and $30,000 for infill areas not funded by the Local Infrastructure Growth Scheme.
A massive penalty overhaul scheme across NSW will see parking fines slashed by 25 per cent. The changes affect zones around Barangaroo, the Sydney foreshore, the Botanic Gardens, Centennial Park, Sydney Olympic Park, and Wentworth and Parramatta Parks.
Off-the-plan stamp duty concessions will be ending on June 30 across the state. These make way for the state to enter the final phase of abolishment of commercial stamp duty.
There are also changes to stamp duty in the ACT. The tax will be abolished for first home buyers who earn less than $160,000 for new or existing homes from July 1.
This coincides with the abolition of the first home buyers grant in the state.
Road tolls to increase
If you’re a regular user of toll roads in Sydney, Melbourne or Brisbane, be prepared for an increase. Transurban are planning an increase to rates by up to nine cents from July 1.
In Sydney this affects the Cross City Tunnel, Eastern Distributor, some Lane Cove Tunnels and the M2 Motorway.
Brisbane will be paying more for the Gateway Motorway, Logan Motorway, Legacy Way, Go Between Bridge and Clem7.
The increases in Melbourne will affect CityLink. Melbourne operator EastLink is also bumping up costs.