Tax avoidance on property sales – don’t risk it
Property developers who try and avoid declaring tax on the sale of property are more likely than ever to be contacted by the ATO.
Specific funding received in the 2010 -2011 Budget will be used to look closely at GST compliance as part of a dedicated program over the next four years.
As part of this program, the ATO is increasing its use of data matching to ensure property developers are reporting all tax obligations on property sales, to promote a level playing field and to make it fairer for all Australians.
Deputy Commissioner Shane Reardon said the ATO is matching information provided on Business Activity Statements (BAS) and income tax returns with information from the Office of State Revenue and Land Titles Office to ensure property developers are correctly reporting GST and income tax (including capital gains tax) on property sales.
“We have found some property developers deliberately avoiding their obligations by collecting the GST from the purchaser and then failing to pass this on to the ATO either by not lodging their BAS, de-registering from the GST system or not reporting sales within their BAS.
“We are also looking at property developers who intentionally remain outside the GST system or claim credits during construction, but then fail to lodge their business activity statement and individual income tax return.
“These developers are cheating the community and breaking the law.
In a recent case, a taxpayer was identified as a developer of subdivisions and purchased rural
farmland, subdividing it into residential lots for the purpose of sale. Through data matching activities the ATO identified over 100 sales made by the same taxpayer. The main issues in this case were:
•Omitted GST of approximately $1 million
•Non lodgement/default assessments of $5 million (GST)
•Overstated Input Tax Credits of $200k
The taxpayer had not reported the property sales and was charged the highest penalty applicable – amounting to approximately $4.5 million.
“Where we find people who deliberately avoid their tax obligations we will deal with them firmly with appropriate penalties, interest or even prosecution,” Mr Reardon said.
Every property transaction you make may have a tax consequence you need to report. If you think you have undeclared tax relating to a property sale, contact your tax agent or the ATO to make a voluntary disclosure.
More information on GST and property is available from www.ato.gov.au/gstpropertyguide






