GST Withholding at Property Settlement: New Homes and Residential Land Explained

Purchasers of new residential premises or potential residential land may need to withhold part of the price at settlement and pay it directly to the ATO. The contract should contain a written supplier notification stating whether withholding is required and, if so, the payment details.

Which transactions can be affected

The regime commonly applies to taxable sales of new residential premises and potential residential land. It may arise in developer sales, newly completed homes and some vacant-land transactions.

Established residential property is generally not a taxable supply of new residential premises, but the contract and seller’s notification must still be reviewed rather than relying on the marketing description.

The supplier notification

The seller must give the purchaser written notice before settlement stating whether GST withholding is required. If required, the notice should provide the seller’s details, amount and when payment is due.

This information is normally contained in the Contract of Sale or a separate notice. It should be checked during contract review before the buyer signs.

What the buyer must do

The purchaser or their representative lodges the required ATO forms and obtains a payment reference number. At settlement, the withholding amount is directed to the ATO as part of the electronic financial settlement.

The withholding is normally taken from the price otherwise payable to the seller; it is not usually an extra amount added to the buyer’s purchase price.

Common contract risks

Incorrect seller details, inconsistent withholding amounts, a margin-scheme clause, late notification or uncertainty about whether premises are new should be resolved before settlement.

GST liability and the withholding mechanism are related but not identical. Sellers and developers should obtain accounting or tax advice about their GST liability and margin-scheme position.

DY practical point

Do not copy payment details from an informal email. The ATO payment reference and amount should be generated and verified through the formal settlement process to reduce both error and cyber-fraud risk.

Frequently asked questions

Does GST withholding apply to every home purchase?

No. It commonly applies to taxable new residential premises and potential residential land, not ordinary established residential sales.

Is withholding paid on top of the purchase price?

Usually no. It is directed to the ATO from the amount otherwise payable to the seller at settlement.

Who lodges the ATO forms?

The purchaser is responsible, commonly through their conveyancer or solicitor using information supplied by the seller.

Official references

Australian Taxation Office — GST at settlement

Australian Taxation Office — Purchaser guide

This article provides general information about Victorian conveyancing as at 17 July 2026. It is not legal or financial advice. The correct approach depends on the contract, title, parties and circumstances of each transaction.