Background: The former government announced on 14 May 2013 that it would introduce a 10% non-final withholding tax on payments made to foreign residents that dispose of certain taxable Australian property. The Bill for this measure, introduced by the current Government has been passed and received Royal Assent on 25 February 2016.
The new withholding regime will apply to contracts entered into on or after 1 July 2016.
Broadly, where a foreign resident disposes of certain taxable Australian property, the purchaser will be required to withhold 10% of the purchase price*.and pay that amount to the Australian Taxation Office (ATO). .
* Note: the legislation specifies that the 10% withholding is actually on the "first element of the cost base". However, as purchase price is understood by vendors and purchasers, and in many instances will equate with the "first element of the cost base", we have used the term purchase price for simplicity.
This page is for: Home buyer / ownerProperty industry
NOTE: As of 3 February 2016, the legislative requirement for the maximum scale of fees will be revoked. As such settlement agents will be able to set their own fees. This will affect settlement transactions which occur after this date. For further information please view the Minister’s media statement.
Unless you are a suitably qualified lawyer, it would be very unwise to try to carry out the settlement of your own property. It's a complex and time consuming business, with many traps for the unwary.
When you are buying a property, it is necessary for all the paperwork to be completed and all the promises to be fulfilled in the contract for the sale of the property. Such work is known as conveyancing. If you don't want to do this yourself, you must employ a licensed settlement agent or a lawyer with a current practicing certificate in law to attend to all these details on your behalf.
The main difference between employing a settlement agent as opposed to a lawyer is that settlement agents are not qualified to give you legal advice. However, a settlement agent is required by law to let you know when it is a good idea to get legal advice.
As of 3rd February 2016, the regulation of Scaled Settlement Agents' capped fee has ceased. Settlement Agents are now able to charge their worth for their services in executing the transaction. The new fee disclosure rule in found in the rule 6B & unforeseen significant change for scope of work under 6C of the Settlement Agents Code of Conduct & Act.
Removing the 'Maximum Scale' and de-regulating fees has allowed Settlement Agents greater flexibility to cater to the differing needs of their particular clientèle and complexity of work involved.
Pursuant to the the new rule, a Settlement Agent must provide their client with a written costs disclosure setting out the maximum amount they will be charging for their services, before the client signs the Form 1 Appointment to Act.
Some agencies may differ by supplying you with a low cost fee, but refer or attach additional costs disclosure of their 'add-on' or 'additional charges' inside a disclosure statement -similar to that of a lender where they might detail their rights to charge the consumer fees that could exceed the old 'Scale'.
Things to be careful of might include;
A garnishee order is an order issued by the Court requiring the party to whom the order is addressed to make payments in satisfaction of a judgment debt to the judgment creditor. (Some courts now refer to garnishees as money redirection orders).
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