• If you are selling property over $2 million - New rules

    The government is strengthening our foreign resident capital gains tax (CGT) regime to assist in the collection of foreign residents' CGT liabilities.

    New rules will soon apply to sales of Australian real property with a market value of $2 million or above.

    Sellers will incur a 10% non-final withholding tax for all contracts entered into on or after 1 July 2016 unless they obtain a clearance certificate or variation certificate.

    Selling property with a market value of $2 million or above:

    • Australian residents need to obtain a clearance certificate from us prior to settlement to avoid the 10% non-final withholding tax, and, provide it to the purchaser prior to settlement.
    • Foreign residents may apply to us for a variation to the 10% non-final withholding tax, and provide this variation notice to the purchaser prior to settlement.
    • Vendors can claim a credit for the withholding amount paid to the ATO against the final tax assessed in their income tax return.

    Purchasing property with a market value of $2 million or above:

    • You will be required to withhold 10% of the purchase price and pay it to us unless the seller provides you with a clearance certificate.
    • You may vary down the 10% non-final withholding tax if the seller has received a variation notice from us and provided it you prior to settlement.
    • Purchasers must pay the amount withheld at settlement to the ATO.

    Conveyancers will receive a detailed education guide in the coming weeks.

    See also:

      Last modified: 10 Jun 2016QC 49331