23/06/2017
While the impending ATO legislation regarding property sales of $750,000 or more only has tax implications for foreign residents the impact of its implementation actually falls on all sellers of properties over $750,000.
The below is an excerpt from our industry body the AICWA regarding these changes that are due to take effect on July 1st. In short from July all sellers of property with a sales price of $750,000 or above will need to provide a clearance certificate from the ATO that proves they are Australian Residents and therefore exempt from the 12.5% Foreign Resident Capital Gains Withholding. If this certificate is not provided then the ATO has powers to withhold 12.5% of the sales proceeds.
As with all new and updated legisaltion, here at C&C Conveyancing we will advise and assist all affected seller 's to ensure complaince with these new laws.
AICWA Notice
"On 1 July 2017, the proposed changes to the Foreign Resident Capital Gains Withholding (FRCGW) rate and threshold will take effect.
These changes will apply to contracts entered into on, or after 1 July 2017 for real property disposals where the contract price is $750,000 and above. The FRCGW tax rate will also change from the existing rate of 10% to 12.5%.
The existing $2 million threshold and 10% rate will still apply for any contracts entered into before 1 July 2017 even if they are not due to settle until after 1 July 2017.
The change to the threshold from $2 million to $750,000 will result in many more properties requiring a clearance certificate for exemption of the withholding. The Australian Taxation Office (ATO) can only grant clearance certificates to a seller who is an Australian resident.
Australian resident sellers of real property with a market value of $750,000 or above must apply for a clearance certificate to ensure no funds are withheld from their sale proceeds.
Important: If the seller does not provide the clearance certificate before the settlement of the transaction the purchaser will be required to withhold 12.5% of the purchase price and pay this to the ATO.
Further information and the Foreign resident capital gains withholding certificate application form can be obtained by visiting the ATO website"