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Edited version of your written advice
Authorisation Number: 1051269261179
Date of advice: 23 August 2017
Ruling
Subject: Foreign resident capital gains withholding clearance certificates
Question 1
Is a foreign resident capital gains withholding clearance certificate issued in the name of the trust required?
Answer:
No.
Question 2
Can the purchaser rely on certificates in the names of individual trustees without those certificates referring to a trust so that the purchaser is not required to withholding and pay an amount to the ATO?
Answer:
Yes.
Foreign resident capital gains withholding
Subdivision 14-D of Schedule 1 to the Taxation Administration Act 1953 (TAA) outlines the foreign resident capital gains withholding regime.
From 1 July 2016, purchasers of certain Australian assets are obliged to withhold an amount of the purchase price of the asset on settlement where they have purchased the property from a foreign resident, and to remit this amount to the Commissioner of Taxation (the Commissioner). Australian resident vendors can apply to the Commissioner for a clearance certificate indicating that the withholding is not required.
Clearance certificates
When applying for a clearance certificate the vendor should be the entity that has legal title to the asset. If there are multiple vendors on the title, each vendor will need to apply for a separate certificate in their name.
In cases where the legal title of the property is in the name of the trustee who is holding the property on behalf of the trust or superannuation fund then, it is the trustee who should apply for the clearance certificate, not the trust or superannuation fund. Again, each vendor must complete a separate application form.
Similarly, where a partnership is involved, each individual member of the partnership is required to complete a separate application form; a certificate should not issue in the name of the partnership.
The Commissioner is aware that in certain states there are situations in which the property can be held legally by a trust. However, this does not appear to be the case here as the certificate of title records provided do not indicate such a circumstance.
This ruling applies for the following period:
Year ended 30 June 2018
The scheme commenced on:
1 July 2017
Relevant facts and circumstances
The land described in the provided land title searches is being sold and the purchaser’s solicitor is of the view that a foreign resident capital gains withholding clearance certificate should be issued in the name of the trust.
Relevant legislative provisions
Taxation Administration Act 1953 – Sch1 – Subdivision 14-D
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