ATO warns councils over property reporting

The Australian Taxation Office has issued a warning to local councils after finding “systemic” failures in reporting property sales.

The ATO says under GST at Settlement requirements introduced in 2018 big and small government bodies are required by law to report GST in their business activity statements when they supply new residential property or potential residential land.

Property sales must be reported in the BAS during which settlement occurs.

“The ATO has identified that some local councils are not aware of their obligations under the GST at Settlement measure and are not reporting all or some of their property sales in their business activity statements,” the ATO said.

A spokeswoman said the problem appeared to be across the board.

“Failure to report or incorrect reporting appears to be systemic,” she told Government News.

Comply or face penalties, councils told

The ATO says councils that incorrectly report or fail to report property sales face penalties, especially if “recklessness” or intentional disregard is found.

They can also face penalties for failing to provide a supplier notification to a purchaser.

The spokeswoman said lack of information and poor communication was most likely the source of the problem, rather than laziness or dishonesty on the part of councils.

“It’s occurring generally due to information not being shared between councils and their recordkeeping areas or accountants and sometimes due to timing,” she said.

“It also depends on who’s role is it to make them aware – this should be a partnership between the ATO, the councils and their intermediaries.

“We are finding that when we provide further communication on the process it is then being completed correctly.”

GST at Settlement requires property purchasers pay the GST portion of the sale directly to the ATO and the rest to the seller.

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