01 Jul 2016
Get Up to Speed with New ATO Property Withholding Rules

Get Up to Speed with New ATO Property Withholding Rules

Get Up to Speed with New ATO Property Withholding Rules
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Guid,Tips,Selling,Auction real estate agents

As of July 1, 2016 new property withholding rules came into effect, so we explain exactly how they work below.

The following is Information supplied by the Foreign Investment Real Estate Initiative, Public Groups and International - Australian Taxation Office

New withholding rules on sales of property by foreign residents have been introduced to coincide with the recent increase in foreign investment in Australia (including real estate). The rules will apply where real property contracts are entered into on or after July 1, 2016, but only apply to sales of residential property with a market value in excess of $2 million. Withholding does not apply to sales by Australian resident sellers, but these sellers will need to obtain a clearance certificate that they can provide the purchaser.

The changes were announced in 2013 and became law earlier this year. The ATO has engaged real estate agents, conveyancers and legal practitioners to ensure the industry is prepared to help their clients meet their withholding obligations.

Is this a new arrangement?

These withholding arrangements exist in many other countries such as Canada, France, Spain, Japan and the USA. They are designed to ensure foreign residents pay capital gains tax on the sale of residential property, just as Australian residents currently have to under certain circumstances.

How do I apply for a clearance certificate?

Clearance certificate application forms are available to download through the ATO’s website here, and is designed to be a straightforward process, without much hassle for sellers to complete.

Sellers can complete and lodge the form themselves, or it can be completed and lodged on their behalf by a third party, such as a solicitor or accountant.

There is no ATO fee for clearance certificate applications and all Australian residents are encouraged to apply for a clearance certificate as early as possible in the sale process (where the property for sale has a value of $2 million or more.

A clearance certificate is valid for 12 months from issue, and must be valid at the time it is made available to the buyer.

For the latest property market information visit the blog section of the Naked Real Estate website.

Written by Naked Writers

Get Up to Speed with New ATO Property Withholding Rules
Naked Writers

Naked Real Estate Writers collaborating to bring the latest news and trends in real estate for buying, selling and working in the exciting world of real estate. Is it time for you to get Naked?

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