Commissioner Kenneth Hayne has delivered recommendations from the royal commission into financial misconduct that could see consumers forced to pay upfront mortgage broker fees. The recommendations for the radical shake-up to the broking industry was not unexpected, in early 2017 The Australian Securities & Investments Commission (ASIC) conducted a “Review of mortgage broker remuneration”.
READ MORE HERE
These are the occasions when a peak body association has to advocate practical solutions that find a balance between its member’s interests and consumer expectations. The current broker model is beset by aggregators and incentivised commission structures but yet on the other hand has seen a rise in smaller lenders who are offering exceptional rates which have been drivers for competition in the marketplace. Homebuyers are typically highly satisfied with their brokers in facilitating funds to purchase their home but are increasingly finding they are unable to service their loans.
When compared to the settlement/conveyancing profession, which is a lean mean industry, our continued sustainability is reliant upon workable regulatory frameworks that deliver competition and independence of the professionals servicing consumers. The AICWA has, and continues, to advocate for regulatory frameworks that ensure we do not compromise the reason why settlement agents get up in the morning, after all it’s working in the client's best interest that matters!
Source:6th February 2019 AICWA e-Newsletter
AICWA has contacted DMRIS to obtain additional information on the recent changes (Jan 1st, 2019) so as to understand requirements for landlords, buyers and sellers.
DMIRs previously advised that:
The 2018 edition of AS/NZS 3000:2018, Electrical Installations (known as the Wiring Rules) is now available. The new standard has been developed by Standards Australia in collaboration with industry and government.
Source:23rd January 2019 AICWA e-Newsletter
Foreign Buyer Duty
Navigating the expectations of buyers in understanding their requirement to remit foreign buyer duty is inevitable. The declaration must be made by the buyer and it is strongly advised that you do not assist buyers in making any determination on their behalf where there is any doubt.
Foreign individuals are classified as an individual who is not an Australian citizen, or does not hold a permanent or special category visa. In other words, if you are either (i) Australian citizen; (ii) Australian permanent visa holder; or (iii) a special category visa holder – you are not foreign.
Confusion can occur when dealing with New Zealanders who benefit from close ties to Australia. OSR have noted that:
Provided a New Zealand citizen has a valid special category visa when they acquire the property, they will not be liable to pay foreign transfer duty. If the visa lapses, is cancelled or revoked for any reason prior to settlement, they would need to notify OSR.
It is recommend you advise your clients, where doubt exists, to submit a web enquiry or contact OSR on 9262 1100.
To find out more refer buyers to the Visa Holder Enquiry tool for visa enquiries hosted by the Department of Home Affairs.
Source: 23rd January 2019 AICWA e-Newsletter
On 1 January 2019, foreign transfer duty and foreign landholder duty came into effect by amending the Duties Act 2008. The additional 7% duty applies to acquisitions of residential property where the buyer or transferee are foreign persons, including foreign companies and trusts.
What does this mean to you?
Every buyer or transferee that acquires or purchases land in Western Australia is now required to complete and lodge a Foreign Transfer Duty Declaration Form within two months of executing the dutiable transaction.
cimWell if you haven't already done so;
We usually send our clients ALL the required 'wet-ink' paperwork with our initial postal package. Sometimes we need to allow for the other party to complete certain forms first, so thanks for your patience and understanding if you receive more than one form requiring 'wet-ink' execution.
That Loan Amount on the Unconditional/Formal approval is usually NOT the exact amount your lender will make Available as Funds (aka funds your lender will bring) for Settlement.
The Lender will usually take their fees and costs out of that approved Loan Amount this effectively reduces the Available Funds at settlement. Which may mean that the Buyer might have a 'Client contribution', or 'Funds to complete', or sometimes misnamed as additional 'Deposit' (Deposit as defined under your contract is to be held by the Deposit Stakeholder).
So if there is a 'Client Contribution', then best become aware of the expected difference on the required balance you will need Contribute towards settlement.
We often are not advised of the exact amount the lender will bring to Settlement, till much closer to settlement -often not till morning of settleemnt. However your broker/banker who setup the loan would have the best idea of that amount, and will have usually calculated to some best efforts the amount you will need to contribute. So the next query;
However some lenders / circumstances will not cater for that, in which case our trust account for your contribution is the only other way, these deposits normally take the banks upto three (3) business days to clear those funds. There is a quicker process referred to as Real Time Gross Settlement (RTGS) which allows for funds to be cleared usually by same or at least next business day- if beating for the transferring bank cut-off.
Attend to conditions especially before any expire. ie Termite or Building Inspections, due diligence clause, etc.. and confirm with both the Real Estate Agent and also A1 Conveyancing, once done.
Sellers; Make Sure that your Discharge Authority has been completed and A1 Conveyancing have been sent a copy.
Complete and obligations under your contract and confirm with both the Real Estate Agent and also A1 Conveyancing, once done.
Foreign Buyers Duty
For transactions executed on or after 1 January 2019, an additional 7% duty will be chargeable on the dutiable value of certain acquisitions of residential property by foreign buyers.
Each person acquiring land in Western Australia must complete a foreign buyers declaration form HERE declaring whether they are a foreign person.
The Online Duties system will be modified to allow self-assessment of most dutiable transactions that are chargeable with foreign buyers duty.
For the purposes of the foreign buyers duty, residential property is –
1. land in Western Australia that is, or is capable of being, or is intended to be, used solely or dominantly for residential purposes;
2. vacant or substantially vacant land that is zone solely for residential purposes; or
3. any estate of interest in land described in (1) or (2).
A foreign person includes a foreign individual, corporation or trust.
See the foreign transfer duty HERE and foreign landholder duty fact sheets HERE for information about foreign persons and residential property.
Exemptions or nominal transfer duty
Most dutiable transactions that would be eligible for nominal duty or an exemption from transfer duty will also be exempt from foreign buyers duty. This includes certain transactions involving family court orders and matrimonial agreements, deceased estate transactions and partitions of residential property.
Face-to-face customer education sessions commenced in December 2018. Visit our OSR's education page to register now for upcoming sessions HERE.
Foreign buyer duty publications, frequently asked questions and other support material is available HERE
For more information on foreign buyers duty, see the legislation available on the Western Australian Parliament website HERE
Watch the Video HERE
Source: 19th December 2018 AICWA e-Newsletter
CIRCULAR 17 DUTIES ACT 2008
Foreign Buyers Duty
The Duties Amendment (Additional Duty for Foreign Persons) Bill 2018 (‘the Bill’) was second read into Parliament on 13 June 2018. The Bill operates to amend the Duties Act 2008 (‘Duties Act’) to impose additional duty on certain transactions involving foreign persons or entities acquiring residential property in Western Australia.
These amendments are subject to the passing of the Bill by Parliament and the granting of Royal Assent. The changes are proposed to come into effect on 1 January 2019.
The information provided in this circular is not an exhaustive explanation of the amendments, and reference should be made to the Bill and the Explanatory Memorandum available on the Western Australian Parliament website.
READ MORE HERE
Duty Training Sessions
AICWA will be liaising with OSR to deliver training opportunities to facilitate the Foreign Buyer Duty remittance. Stay tuned for more!
Source:10th October 2018 AICWA e-Newsletter
"Buyers can generally move into the property once settlement has taken place, unless the O̶ ̶&̶ ̶A̶ ̶o̶t̶h̶e̶r̶w̶i̶s̶e̶ ̶s̶p̶e̶c̶i̶f̶i̶e̶s̶ ̶o̶r̶ ̶t̶h̶e̶ ̶h̶o̶m̶e̶ ̶i̶s̶ ̶t̶h̶e̶ ̶s̶e̶l̶l̶e̶r̶’̶s̶ ̶r̶e̶s̶i̶d̶e̶n̶c̶e̶ Seller occupied as their 'principal place of residence' immediately prior to Settlement. If this is the case the seller may remain until noon on the day after settlement.
However, buyers sometimes reach agreement with the seller to move into the property earlier than the settlement date. Buyers who are considering taking possession of a property prior to settlement may be asked to sign a form which states that the buyer agrees to take the property ‘as is’, and a statement that the buyer makes their offer unconditional.
Consequently, the seller may not be required to fulfil any special conditions which have been inserted into the O & A.
Both the seller and the buyer should seek legal advice about the potential problems that could arise from prior possession and consider the risks carefully."
Just a reminder that GST is now a query of every Residential contract dated on & post 1/7/18.
Not just the obvious ‘new land or new builds’, since ‘New Residential Premises’ under the Taxation administration act, may still be quite aged properties!
“The term ‘new residential premises’ is defined in s 40-75 of the GST Act:
Residential premises are new residential premises if they:
a. have not previously been sold as residential premises and have not previously been the subject of a long-term lease; or
b. have been created through substantial renovations of a building; or
c. have been built, or contain a building that has been built, to replace demolished premises on the same land.”
The AICWA have created a ‘Seller’s Notice to Buyer’ seems to be more direct about if GST is applicable or not?
Either way this new ruling is not well known, nor tested so watch this space as it is likely to develop further as time goes on.
On or after 1 July 2018, certain purchasers of new residential premises or potential residential land will be required to withhold an amount from the price of the supply for payment to us.
Note: When we refer to purchasers we are also referring to lessees under long-term leases.
The withholding amount is due on or before the day that consideration for the supply (other than a deposit) is first provided. If the contract is an instalment contract that will be the day the first instalment is paid otherwise it will be the day of settlement.
Suppliers will be required to assist their purchasers to comply by notifying them whether or not they have a withholding obligation on supplies of certain kinds of residential premises and potential residential land. Where there is a withholding obligation, the supplier must notify the purchaser of the amount they must withhold, when they must pay it to us, and of certain other particulars.
The amount a purchaser must withhold and pay to us is generally either:
1/11th of the contract price (for fully taxable supplies)
7% of the contract price (for margin scheme supplies), or
10% of GST exclusive market value of the supply (for supplies between associates for consideration less than GST inclusive market value).
Purchasers do not need to register for GST just because they have a withholding requirement.
Transitional arrangements apply to contracts entered into before 1 July 2018.
Find out about:
Transitional arrangements for property contracts entered into before 1 July 2018
How the measure will work from 1 July 2018
When the contract doesn’t settle
No additional payment on top of the agreed purchase price
Information for suppliers and their representatives
Information for purchasers and their representatives
Video: GST withholding for certain taxable sales of property (External Link)
ATO podcast – Tax inVoice – Episode 4 – GST at settlement
GST at settlement webinar (External Link)
Authorised by the Australian Government, Canberra
The GST withholding obligation was announced in the May 2017 Federal Budget.
It is directed at non-compliance by property suppliers who sell properties for a price that includes the GST but who avoid remitting the GST by dissolving their businesses before their next BAS lodgment. This is a form of phoenixing.
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