The new measures which have an impact irrespective of whether you are buying property or selling property will be in place for sales contracts entered into on or after 1 July 2016 and will affect any sales of Australian real estate assets where the market value is equal to or greater than $2 million.
If you act for the purchaser additional steps to consider will include:
1.Enquiring whether the vendor has a clearance certificate.
2.If the vendor does not have a clearance certificate then 10 per cent of the sale price will need to be remitted to the ATO before or on settlement for the capital gains tax withholding (WHT).
If you act for the vendor additional steps to consider will include:
1.Enquiring whether the vendor has obtained a clearance certificate. If the vendor is not a foreign resident for Australian income tax purposes then they should be able to obtain a clearance certificate from the ATO and this should be obtained before settlement.
2.If a clearance certificate has not been obtained by the vendor (ie. because they are a foreign resident or for any other reason) then on settlement you need to ensure that the purchaser has remitted the 10 per cent WHT to the ATO.
3. If the purchaser has remitted WHT to the ATO then the vendor will be able to claim some or all of it back when they lodge their next income tax return.
The new foreign resident capital gains WHT requirements also applies to interests in indirect Australian real property interest and options to acquire Australian real estate assets or an indirect interest in Australian real property.
If you have any questions or concerns about foreign resident capital gains withholding payments you should contact a specialist property lawyer. Telephone Matthews Folbigg on 1800 300 308 and ask to speak with a property lawyer.