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.
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