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  • Asset types

    The legislation applies to the following asset types:

    • real property – taxable Australian real property with a market value of $750,000 or more                    
      • vacant land, buildings, residential and commercial property
      • mining, quarrying or prospecting rights where the material is situated in Australia
      • a lease over real property in Australia if a lease premium has been paid for the grant of the lease
    • other assets                  
      • indirect Australian real property interests in Australian entities (that is, a membership interest of 10% or more in an entity whose underlying value is principally derived from Australian real property) – this includes shares in a company that owns land or a building erected on that land, where the ownership of the shares gives a right to occupy that land or building (that is, a company title interest in real property)
      • options or rights to acquire any of the above asset types.

    Market value

    In many cases, the market value of a property will be the purchase price. Where the purchase price has been negotiated between the vendor and the purchaser, acting at arm’s length, we will accept the purchase price as a proxy for market value.

    However, there could be circumstances where the market value is different to the stated purchase price (for example, where the vendor and purchaser are related parties and did not deal with each other at arm’s length). In such cases, we will not accept the purchase price as a proxy for market value and the purchaser will need to seek a separate expert evaluation.

    Note: If the purchase price is used as a proxy for market value, the market value is the purchase price before adjustment for any disbursements at settlement (for example, council rates, water and sewer charges and strata levies). Therefore, the $750,000 threshold test is applied to the purchase price before adjustment for disbursements.

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    Excluded assets

    Some assets are not subject to the withholding, including:

    • taxable Australian real property with a market value of less than $750,000
    • an indirect Australian real property interest providing a company title interest with a market value of less than $750,000
    • transactions conducted through an approved stock exchange
    • transactions conducted using a broker-operated crossing system, such as a ‘dark pool’, as described in the ASIC Market Integrity Rules (ASX Market) 2010
    • transactions subject to another withholding obligation
    • securities lending arrangements, as these don't trigger a CGT liability for the vendor and therefore no payment obligation is imposed
    • transactions where the vendor is in external administration or transactions arising from the administration of a bankrupt estate, a composition or scheme of arrangement, a debt agreement, a personal insolvency agreement, or same or similar circumstances under a foreign law.

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    Foreign resident capital gains withholding doesn't apply when the vendor disposes of either:

      Last modified: 01 Mar 2021QC 48972