CHANGES TO THE FOREIGN RESIDENT CAPITAL GAINS WITHHOLDING REGIME
From 1 July 2017, Australian resident vendors selling real estate with a value of $750,000.00 or greater will be required to apply for a clearance certificate from the Australian Taxation Office (“ATO”) to ensure that an amount is not withheld from their sale proceeds. Previously the Foreign Resident Capital Gains Withholding Regime (the “Regime”) only applied to properties sold with a value of $2 million or greater.
If a valid clearance certificate is not provided by settlement, the purchaser has an obligation to withhold 12.5% of the purchase price and pay this directly to the ATO. The withholding amount was previously 10% of the purchase price.
The changes noted above will substantially increase the number of transactions to which the withholding regime applies as many of Sydney’s houses and apartments exceed the threshold value.
Please note that the above measures will only apply to contracts entered into from 1 July 2017. The previous threshold will apply to contracts that are entered into from 1 July 2016 and before 1 July 2017, even if they are not due to settle until after 1 July 2017.
If you have any questions in relation to the Foreign Capital Gains Withholding Regime, please contact our team of Lawyers at the Quinn Group on (02) 9223 9166 or submit an online enquiry form today.