ATO CHANGES FROM 1 JULY 2016 AFFECTS ALL REAL PROPERTY TRANSACTIONS OVER $2 MILLION (INCLUDING AGGREGATED) VALUES
Legislation will take effect as of July 1st 2016 requiring that ALL real property transactions over $2m be assessed to determine what (if any) Capital Gains Tax (CGT) liability exists.
Despite the confusing name containing the word "Foreign" in the new Tax law "Foreign Resident Capital Gains withholding payments".
All dealings that might fall in the $2 million or more market value of real property in Australia (aggregated value is used where multiple seller or buyer). Sellers should apply for the Clearance Certificate (it is valid for 12 months) before settlement to meet the Settlement Date.
There are many different scenarios which include multiple buyers or sellers and variations to the amount held.
In circumstances where there are multiple buyers (ie. A farmer/developer has sold his farm off in separate lots) but the aggregated market value is over $2 million, the Seller will be required to provide a clearance certificate. If not each Buyer must withhold in proportion to their percentage of the total purchase price.
More information on this can be found on the ATO website at the following links:
https://www.ato.gov.au/…/js36800_Foreign%20residents%20fact… or https://goo.gl/TFkD3t
https://www.ato.gov.au/…/foreign-resident-capital-gains-wi…/ or https://goo.gl/1Y01VE
https://www.ato.gov.au/…/foreign-resident-capital-gains-wi…/ or https://goo.gl/GYzmuA
https://www.ato.gov.au/…/Foreign-resident-capital-gains-wi…/ or https://goo.gl/2GC9o2
https://www.ato.gov.au/…/Foreign-resident-capital-gains-wi…/ or https://goo.gl/EFtGIZ
It is important to note that your Settlement Agent is unable to assist in applying for the Clearance Certificate.
Without the Clearance Certificate the Buyers must withhold 10% of the purchase price and pay that to the ATO.
A variation to the requirement may be applied for via ato.gov.au/FRCGW Form available after 27/6/16.
Client not on notice of proposed heritage listing
Our client purchased an original 1950s style home in SA with the intent of demolishing it and building their dream home. The client exchanged contracts and began to prepare plans for their new home. Shortly after settlement, the client submitted plans to the Council to construct their dream home. The plans were rejected by Council on the basis of a proposed heritage listing, which was applied just prior to settlement. The client was in shock and immediately contacted their conveyancer.
What did First Title do?
On assessment of the claim, it was revealed the conveyancer and the client were not on notice of the proposed heritage listing of the property as the certificates from Council relied on were not up to date. First Title engaged a lawyer and expert heritage architect in support of an application seeking to overturn the proposed heritage listing.
What was the resolution?
First Title accepted the claim pursuant to its 'heritage cover' on the basis that the client was not on notice that the house was heritage listed. First Title paid for all costs associated with successfully overturning the proposed heritage listing, including legal and expert evidence fees.
Total payment exceeded $11,000
Registration Gap - Third Party Claim
One day after purchasing his home in WA, our client learned he could not become the registered owner of his property due to a third party claim. Our client was informed by his conveyancer that the stepchildren of the vendor registered a testamentary right to his property. The children claimed they were gifted the property in their mother's will. The children refused to remove their interest in the land unless they were given money from the sale of our client's property.
What did First Title do?
On assessment of the claim, it was revealed the conveyancer and the client were not on notice of a potential third party interest in the property. First Title engaged a lawyer to ensure our client would become the registered owner of the property and to put the potential interest of the vendor's stepchildren in the property to rest.
What was the resolution?
First Title accepted the claim pursuant to its 'registration gap' coverage on the basis that between settlement and registration of our client's transfer to our client's name another interest was registered on the property title. First Title paid for all costs associated with successfully settling the dispute over the client's property through mediation.
Payment to date exceeds $20,000
For more information on First Title's insurance options call us on
1300 362 178. Alternatively, you can visit our website.
Source: email News from First Title: Claims Chronicles - May 2016
Watch this presentation for an overview of the proposed strata reforms.
The WA Government has given Landgate responsibility for delivering reforms to Western Australia's Strata Titles Act 1985.
The proposed reforms aim to provide more flexible and sustainable housing options to benefit developers, strata owners, investors, residents and tenants. They aim to improve the way strata schemes work but not to change current strata owners' land titles and boundaries.
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