Are You Selling Property? Don’t Forget The New Withholding Regime!

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Updated: 17 November 2017

Are you selling Property? Don’t forget the new Withholding Regime!

As from 1st July 2016 new rules applied to the selling of certain taxable Australian assets.

This is a new regime put in place by the ATO to ostensibly ensure that foreign investors do not avoid paying capital gains tax. However, the rules impact on Australian residents and companies as well.

More particularly, as from 1 July 2017, any Seller of real property with a value of $750,000 or over will need to obtain a clearance certificate from the ATO prior to the settlement of Contract. If they do not, then a mandatory 12.5% of the purchase price must be withheld and forwarded to the ATO by the Buyer.

Please note that for the sale of real property of $750,000 or over, a simple Seller declaration that they are not a foreign resident is not sufficient and the clearance certificate must be obtained from the ATO prior to settlement, otherwise the 12.5% withholding regime will apply.

It is also important that the Buyer of real property worth $750,000 or more is also aware of this regime. The reason being is that the obligation to forward the 12.5% withholding amount to the ATO, if no clearance certificate is available by settlement, falls upon the Buyer. In fact, if the Buyer does not pay this amount when they should, the ATO will hold the Buyer liable for it. ATO has stated on its website that general interest charges will accrue from the date of settlement if they don’t obtain the withholding amount when required.

Should you need any information or be concerned in regards to the new withholding regime, please contact MMLaw.

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The content published in this Blog is in the form of academic papers and the opinions expressed herein are generalised. The information provided is for educational purposes, not specific legal advice.

The application of any principles referred to can alter from case to case and accordingly you should seek independent legal advice in respect of your individual circumstances.


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