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.
The GST on property transactions measure has been introduced, as schedule 5 to the Treasury Laws Amendment (2018 Measures No. 1) Bill 2018.
The Government will strengthen compliance with the Goods & Service Tax (GST) law by requiring purchasers of newly constructed residential properties or new subdivisions to remit the GST directly to the Australian Taxation Office (ATO) as part of settlement. The measure will require the purchaser of newly constructed residential properties of new subdivisions to remit the GST on the purchase price directly to the ATO as part of Settlement for contracts on or after July 1, 2018.
You can access the legislation as introduced along with the explanatory materials by following this link HERE.
Change to Western Australian Registrar and Commissioner of Titles’ Joint Practice: Verification of Identity and Authority – fraud mitigation
31 January 2018
As foreshadowed and as part of their fraud mitigation strategy, the Western Australian Commissioner of Titles and the Registrar of Titles have updated their Joint Practice for Verification of Identity and Authority (VOI Practice) for paper-based transactions. The updated VOI Practice more closely aligns to the requirements for national electronic transactions. The changes seek to improve the integrity of information in the Western Australian Land Titles Register, reduce the risk of fraud and improper dealings, and remove confusion for customers and agents operating in both electronic and paper environments.
The key changes to the VOI Practice will:
• extend the requirement for verification of identity to property buyers and caveators lodging and withdrawing caveats;
• update the categories of documents needed to support verification of identity;
• update the procedures for conducting verification of identity in a foreign country; and
• improve the procedures for self-represented parties.
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