Selling Property Over Million - New Rules Apply

As part of the governments focus on strengthening our foreign resident capital gains tax (CGT) regime, new rules will soon apply to sales of Australian real property with a market value of $2 million or more.

Sellers will incur a 10% non-final withholding tax for all contracts entered into on or after 1 July 2016 unless they obtain a clearance certificate or variation certificate.

Selling property with a market value of $2 million or above

Australian residents need to obtain a clearance certificate from the ATO prior to settlement to avoid the 10% non-final withholding tax and provide it to the purchaser prior to settlement.

Foreign residents may apply to the ATO for a variation to the 10% non-final withholding tax, and provide this variation notice to the purchaser prior to settlement.

Vendors can claim a credit for the withholding amount paid to the ATO against the final tax assessed in their income tax return.

Purchasing property with a market value of $2 million or above

You will be required to withhold 10% of the purchase price and pay it to the ATO unless the seller provides you with a clearance certificate

You may vary down the 10% non-final withholding tax if the seller has received a variation notice from the ATO and provided it you prior to settlement.

Purchasers must pay the amount withheld at settlement to the ATO.

For more information or guidance, please contact:

Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au

Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au

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