Authority Updates - National - June 2016

Foreign Residents Withholding Tax

Federal legalisation has passed which will apply to contracts of sale entered into on or after 1 July 2016.

Federal legalisation has passed which will apply to contracts of sale entered into on or after 1 July 2016. Broadly, where a foreign resident disposes of certain taxable Australian property, the purchaser will be required to withhold 10% of the purchase price and pay that amount to the Australian Taxation Office (ATO).

The Australian Tax Office is presenting a free workshop on the new withholding regime at the AIC Offices on 9 June. 

This obligation is to apply to all sales over $2 million dollars (including Australian Residents). Australian Residents will need to apply for a clearance certificate to prevent the tax being withheld. 

So it is important for all practitioners who deal in properties over $2 million to be familiar with the procedure. 

This withholding is limited to taxable Australian property, being:

  • Real property in Australia - land, buildings, residential and commercial property; 
  • Lease premiums paid for the grant of a lease over real property in Australia; 
  • Mining, quarrying or prospecting rights; 
  • Interests in Australian entities whose majority assets consist of the above such property or interests - this is called an indirect interest;
  • Options or rights to acquire the above property or interest.

Fact sheet attached or more info can be found here or 
 
REGISTRATION PROCEDURE: 

You can now register online here.

Registrations close Tuesday 7 June 2016 at 4pm (or earlier if filled)

Read more Australia-Wide Authority Updates
 
Disclaimer: The information herein has been prepared by SAI Global Property Division Pty Ltd ACN 089 586 872 from information released by the Authority cited on this page. It is provided as general background information only; it is not complete; and it does not comprehensively address this subject matter. Readers should not consider the information so provided as advice nor as a recommendation to take any particular course of action. Persons needing advice should consult their own solicitor, accountant or other professional adviser.