GST Withholding at Settlement

Calculate what a purchaser must withhold and pay to the ATO on the sale of new residential premises or potential residential land.

Check whether withholding is triggered before you calculateGST withholding applies to new residential premises and to potential residential land in a subdivision. It does not apply to existing residential premises, which is an input taxed supply. The vendor must give the purchaser a written supplier notification stating whether withholding applies.

The supply

Standard supply · $880,000

How is the supply treated?

Contract price (GST inclusive)

The price stated in the contract, before settlement adjustments.

Market value

Not required

GST-exclusive market value

Used only where the supply is not at arm's length.

Settlement position

Withholding basis

–

applied to this supply

Withheld at settlement

–

paid to the ATO

Share of price

–

held back from the vendor

The three withholding bases compared

Applies to this supplyOther bases

Whether the margin scheme applies is agreed in the contract, and it changes the amount withheld by roughly a third. Where the margin scheme is used the purchaser cannot claim input tax credits on the acquisition, even if registered for GST and acquiring for a creditable purpose — so the lower withholding is not simply a saving.

Selling new residential premises and unsure what to notify?

The vendor must give a written supplier notification before settlement, and the purchaser must lodge two forms with the ATO. We can make sure both sides are covered.

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Who withholds, what they lodge, and when

GST withholding shifts responsibility for GST on new residential property from the vendor to the purchaser. Rather than the vendor collecting GST and remitting it later, the purchaser holds back the GST component at settlement and pays it directly to the ATO.

The vendor must give the purchaser a written supplier notification stating whether withholding applies and, if so, how much. The purchaser lodges Form One before settlement and Form Two on settlement, and the vendor claims a credit for the amount withheld in their business activity statement.

The trigger is the character of the premises, not the price. New residential premises and potential residential land in a subdivision plan are caught. Existing residential premises are input taxed and fall outside the rules entirely, as do commercial residential premises.

Rates & assumptions used

Standard supplies — the purchaser withholds 1/11th of the contract price.
Margin scheme supplies — the purchaser withholds 7% of the contract price. Where the margin scheme is used the purchaser cannot claim input tax credits on that acquisition, even if registered for GST and acquiring for a creditable purpose.
Supplies not at arm's length — withholding is 10% of the GST-exclusive market value.
Withholding applies to new residential premises and to potential residential land included in a property subdivision plan. It does not apply to existing residential premises (an input taxed supply) or to commercial residential premises.
The purchaser lodges Form One (GST property settlement withholding notification) and Form Two (settlement date confirmation) with the ATO. The vendor claims a credit for the amount withheld in their business activity statement.
Not modelled: instalment contracts and long-term leases; supplies of potential residential land to a registered vendor acquiring for a creditable purpose; multiple purchasers holding as tenants in common; the interaction with foreign resident capital gains withholding on the same settlement.

Two withholding regimes on the same settlement?

GST withholding and foreign resident capital gains withholding can both apply to a single transaction, and they interact.

Important. Figures shown are estimates generated from the information you enter. They are not an assessment, a quote, or a statement of what you will actually pay.

GST withholding obligations sit with the purchaser, and penalties can apply where the purchaser fails to withhold and pay the amount to the ATO on or before the day consideration is first provided. Whether a supply is of new residential premises, of potential residential land, or of existing residential premises is a question of fact and law that should be confirmed with the vendor's adviser and reflected in the supplier notification.

This calculator provides a general estimate only, based on the figures you enter and the rates and assumptions listed above as at 28 July 2026. It is not legal, financial, tax or credit advice, does not take account of your objectives, financial situation or needs, and is not a substitute for advice from a qualified adviser. Rates, thresholds, concessions and eligibility rules change, and an official assessment may differ from this estimate. You should confirm your position with the relevant revenue office or the Australian Taxation Office and obtain your own professional advice before acting.