When buying or selling real estate in New South Wales, it’s important to understand every part of the Contract for the Sale and Purchase of Land. Page 3 covers key financial and tax-related disclosures, including deposit arrangements, electronic lodgment, and GST treatment. This page ensures the buyer and seller are aligned on crucial compliance and financial responsibilities before settlement.

Choices and Payment Arrangements

1. Deposit Bond

• The vendor indicates whether they will accept a deposit bond instead of cash.
• A deposit bond is a guarantee issued by a third party (often used by buyers who want to preserve cash flow).
• If “No” is selected, the buyer must pay the deposit in cash.

2. Electronic Lodgment Network (ELN)

• States the platform to be used for electronic settlement (commonly Pexa in NSW).
• Electronic conveyancing is now the standard process and allows faster, more secure settlements.

3. Manual Transaction

• If the transaction is not being conducted via ELN (e.g., paper-based), the vendor must provide further details.
• This may apply in exceptional or complex cases, such as off-market transactions or unregistered land.

Tax Information and Party Declarations

This section contains statutory declarations by both parties to confirm the tax treatment of the transaction. These details are legally binding, so they must be accurate.

1. Land Tax

• Indicates whether land tax is adjustable between the parties.
• If "Yes," the buyer may be required to reimburse the vendor for a portion of prepaid land tax.

2. GST (Goods and Services Tax)

• Confirms whether the sale is a taxable supply under GST law.
• The options include:
  • No: GST does not apply.
  • Yes in full: Full GST applies.
  • Yes to an extent: Only part of the transaction attracts GST (e.g., mixed-use property).

3. Margin Scheme

• Indicates whether the margin scheme will apply.
• This is a method for calculating GST on certain property sales, often used to reduce the tax payable.

4. Reason the Sale is Not Taxable

One or more reasons must be selected. Common examples:

• Vendor is not registered for GST.
• Sale is not in the course of an enterprise.
• Property is used for farming or is input-taxed residential premises.
• Property is sold as part of a GST-free going concern (e.g., investment property with lease).

GST Residential Withholding Payment (GSTRW)

The GSTRW section deals with the buyer’s obligation to withhold a portion of the purchase price and pay it directly to the ATO (Australian Taxation Office).

When It Applies:

• Only if the sale involves new residential premises or potential residential land sold by a GST-registered vendor.

Information Required:

If applicable, the contract must include:

• Supplier’s (vendor’s) name, ABN, and GST details
• Contact details of the representative
• Proportion of the sale price to be withheld
• The GSTRW rate (generally 7% or 1/11th of the price)
• Timing of payment (typically at completion)
• Any non-monetary consideration (e.g., barter or development rights)

Why Page 3 Is Critical

Failing to correctly complete or understand this page may result in:

• Delays in settlement
• ATO penalties for incorrect GST treatment
• Disputes between the buyer and vendor over tax liability or deposit arrangements

Both buyers and vendors should consult with a solicitor or tax advisor to ensure this page is completed correctly and reflects the true nature of the sale.

Frequently Asked Questions (FAQs)

Is GST always payable on a property sale?
No. GST is only payable in specific situations, such as sales of new residential property or commercial property by a registered vendor.

What is the GST residential withholding obligation?
When applicable, the buyer must withhold part of the purchase price and pay it to the ATO on behalf of the vendor.

What is the margin scheme?
A GST calculation method that allows the vendor to pay GST only on the “margin” (sale price minus original purchase price), not the full sale price.

Disclaimers

Legal Disclaimer: This content is intended to provide a general overview of the relevant legislation and should not be relied upon as legal advice. Property and planning laws are subject to change and may vary depending on specific site conditions and council policies. For advice tailored to your circumstances, please consult a qualified legal or planning professional.

General Disclaimer: This article is provided for general informational purposes only and does not constitute legal, planning, or environmental advice. While every effort has been made to ensure accuracy, the information may not reflect the most recent changes in law or policy. You should seek advice from a qualified professional or relevant authority before making any property-related decisions.