On 1 July 2017, the proposed changes to the Foreign Resident Capital Gains Withholding (FRCGW) rate and threshold will take effect.
These changes will apply to contracts entered into on, or after 1 July 2017 for real property disposals where the contract price is $750,000 and above. The FRCGW tax rate will also change from the existing rate of 10% to 12.5%.
The existing $2 million threshold and 10% rate will still apply for any contracts entered into before 1 July 2017 even if they are not due to settle until after 1 July 2017.
The change to the threshold from $2 million to $750,000 will result in many more properties requiring a clearance certificate for exemption of the withholding. The Australian Taxation Office (ATO) can only grant clearance certificates to a seller who is an Australian resident.
By Mr Matthew Ellis – Director MGB Legal
“Recently, the question has been raised about payments made to executors of deceased estates. More specifically, the question was raised about whether it is acceptable to make a payment of the proceeds of settlement directly to the executor, as opposed to an account in the name of the deceased’s estate. Obviously, you have to take your client’s instructions as to how to make payment of cheques, but there is some danger in allowing payments to be made to the executor in their own name, or even directly to beneficiaries.
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