3 June 2016
Are you Planning on Buying or Selling a Property?
From 1 July 2016 a 10% withholding tax will automatically apply for the settlement of all property sales (including a principal place of residence) over $2 million, unless you meet an exemption. The aim is to capture tax from non-residents – but there are implications and actions required for all parties.
What does this mean for you?
If you're purchasing a property
You will be required to remit 10% of the purchase price to the ATO on or before settlement unless the vendor has provided you with a valid clearance certificate from the ATO. Failing to do so can result in General Interest Charges from the ATO.
If you're selling a property
If you are an Australian resident for tax purposes you can avoid the 10% withholding by obtaining a clearance certificate from the ATO. This must be provided to the purchaser before the date of settlement.
If you are a foreign resident for tax purposes you cannot obtain a clearance certificate but you can apply to vary the withholding amount of 10% if it is too high compared to your actual Australian tax liability.
It is important to note that clearance certificates and variations can take up to 28 days to issue after the application is processed. If you are planning on buying or selling a property over $2 million, please contact us to discuss what will be required. Note that the law applies to properties that settle after 30 June 2016 – even if the contract is before that date.
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This Newsletter, of necessity, has dealt with matters of a technical nature in general terms only. Clients should contact us for detailed information on any of the items in the Newsletter. No responsibility for loss occasioned to any person acting or refraining from acting in reliance upon any material in this Newsletter can be accepted by any member or employee of the firm.