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ATO

No TBC indexation in 2020

Transfer balance cap indexation

The ATO has announced indexation of the general TBC will not go ahead in July and also reminded trustees investing in property of their GST obligations.

The ATO has confirmed indexation of the general transfer balance cap will not go ahead this year.

Following its announcement last August that it was preparing for the possibility of indexation occurring at the start of the 2021 financial year, the regulator has stated in an update on its website that the latest consumer price index (CPI) was below the figure that would have triggered indexation.

“The all groups CPI figure for December 2019 quarter has been announced and was 116.2. Indexation of the general transfer balance cap would only have occurred on 1 July 2020 if the all groups CPI figure for this quarter was 116.9 or higher,” the ATO said.

“We now anticipate that the general transfer balance cap will likely be indexed on 1 July 2021.”

The regulator has also reminded trustees investing in residential property of their goods and services tax (GST) obligations.

“If you’re purchasing new residential property or potential residential land as part of your SMSF investment portfolio, there may be GST considerations to be aware of,” it stated.

“If you engage a representative you need to complete a signed declaration so they can lodge two required forms and pay the GST on your behalf.”

The regulator pointed out purchasers who had a GST withholding obligation were required to complete a GST property settlement withholding notification form when the contract was signed and a GST property settlement date confirmation form when the property settled.

At the time of the property settlement, the purchaser would have to pay the GST withheld amount in addition to completing a GST property settlement date confirmation form, it noted.

It also highlighted the importance of obtaining a supplier notification from the property vendor prior to completing a GST property settlement withholding notification form in order to confirm the existence of a GST withholding obligation.

“If the purchaser or their representative knows that a supplier is registered for GST and selling new residential premises, it’s unreasonable not to withhold and pay an amount to us at settlement,” it added.

“We won’t retrospectively penalise purchasers who acted reasonably if it’s later found that a supplier hasn’t met their obligations.”

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