20th August 2016 | Tax
The new withholding rule, effective from 1 July this year after being originally announced in 2013, was introduced to ensure foreign residents meet their capital gains tax obligations, explained BMT Tax Depreciation in a recent investor update.
The rule requires Australian residents who are selling a property with a market value of $2 million or more to obtain a clearance certificate from the ATO. The certificate confirms a 10 per cent withholding amount does not need to be withheld from the transaction.
If the seller does not produce a clearance certificate, the purchaser will be required to withhold 10 per cent of the sale price and pay this to the ATO.
“Vendors are encouraged to obtain the clearance certificate as early as possible, as it must be provided to the purchaser prior to settlement,” said BMT.
“Sellers who fail to produce the certificate and purchasers who don’t receive them are both at risk of being required to pay severe penalties to the ATO for any false or misleading declarations made.”
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.