A recent ruling in the Australian Goods & Services Tax (GST) legislation has meant that thousands of overseas-based Australian residential property investors and expatriates are able to claim back the 10% GST for payments made on services, selling fees, legal fees, property buying agent fees and property management fees in relation to their Australian property holdings.
The Australian Taxation Office (ATO) has recently allowed a special claw-back method and an extension of time to allow landlords to go back to the inception of GST on 1st July 2000 and receive a full refund.
The below table shows the timing requirements of the refund.
|
Period when GST Paid |
Refund Entitlement Expires |
|
1st July 2000 to 30th June 2001 |
Can claim at any time, no expiry date |
|
1st July 2001 to 31st March 2005 Supplier is Monthly GST Lodger |
Four years from the month of lodgement of the GST BAS Statement by supplier. (ie July 2001 must be claimed by July 2005) |
|
1st July 2001 to 31st March 2005 Supplier is Quarterly GST Lodger |
Four years from end of each quarter date of lodgement of GST BAS Statement by supplier. (ie July 2001, Aug 2001 and September 2001 must be claimed by September 2005) |
|
1st April 2005 onwards |
No GST Free Status or refund entitlement. |
An anomaly in the legislation was discovered last year that essentially came down to an unexpected interpretation of the law that now allows overseas landlords to be entitled to GST free status on their property expenses. For the average property owner, this could mean a refund entitlement of over A$600 per property. Unfortunately, the concession does not apply to owners of Australian commercial property.
Steve Douglas, Managing Director of Australasian Taxation Services Pty Ltd (ATS), a specialist taxation consultancy for internationally based Australian property investors, says, “This is a real boon for Australian property investors. We are advising our clients to act straight away as this concession may not continue.” Legislation has recently been submitted in the Australian Parliament to end the GST-free treatment, so it is unknown for what period of time investors will continue to be able to benefit.
In the new legislation currently before parliament, the government has estimated that the cost of the GST free status is A$22 million per annum.“We have created an easy-to-use “GST Refund Pack” for all overseas Australian property investors so that they can claim all the GST entitlements due to them, both quickly and smoothly,” advises Steve Douglas.
The pack is available from the ATS website, and provides investors with the following:
- Clear instructions for investors on how to obtain the refund.
- Declarations required to ensure that the proper amount due is received.
- Copies of the associated Australian Tax Office guidelines.
- Ongoing access to a specialist support facility for any ongoing GST rebate enquires.
- Automatic notification of any changes to the law currently being considered by Parliament that may remove the GST-free entitlement.
Australia has been a favourite and successful investment destination for many international property investors over the past ten years. Consequently there are many thousands of investors and expatriate Australians that should be taking advantage of the windfall.