Thinking of buying or selling property?
NEW TAX LAWS TO BE AWARE OF
New rules have been introduced as a means of preventing foreign residents avoiding tax when selling Australian real estate.
WHAT ARE THE RULES?
New tax law applies to clients buying or selling property with a market value of $750,000+ from 1 July 2017 (previously the threshold was $2 million).
Purchasers are required to withhold 12.5% of the purchase price and send it to the ATO (unless a valid clearance certificate has been obtained).
WHO DO THE RULES AFFECT?
Anyone buying or selling property with a market value of $750,000+.
This includes:
- Taxable Australian real property (residential, commercial, land, mining, quarrying or prospecting rights).
- Indirect property interests.
- Options or rights relating to the above.
AM I EXEMPT IF I AM AN AUSTRALIAN RESIDENT?
If you are selling Australian property, the rules ASSUME you are a non-resident unless you have a clearance certificate from the ATO.
WHAT IF I AM BUYING A PROPERTY?
You need to ensure you receive a clearance certificate from the ATO. Once issued, a clearance certificate is valid for 12 months.
WHAT IF I DON’T GET A CLEARANCE CERTIFICATE?
If you don’t have a clearance certificate, the purchaser of the property must assume you are a foreign resident and will withhold 12.5% of the purchase price to the ATO.
If you would like to discuss further, please contact your client manager.
