Changes to Australia's GST on management and maintenance are not expected to curb buying enthusiasm
Foreign investors considering whether to dive into Australia's softening property market next year will have another factor to consider - the 10 per cent goods and services tax (GST) on all property management and maintenance.
Under the original GST legislation (enacted in 2000), foreign investors and non-resident Australians were exempt from paying GST on agents' fees and for some maintenance services, such as electrical work.
But according to Alison Verhoeven, spokeswoman for the Real Estate Institute of Australia (Reia), the rules were confusing - and applied inconsistently. 'You had, for example, an exemption on electrical work but people still had to pay GST for plumbing services,' she said.
On advice from the Australian Taxation Office, the government has moved to eliminate the anomalies, with the result that from the beginning of next year the exemption will disappear, adding extra costs for foreign investors and non-residents.
'This is just a legislative amendment for the sake of consistency,' Ms Verhoeven said. 'I doubt it is going to have much of an impact on people's investment decisions.'