Listed, Sold or buying a property market value of $2 mil. or over?-ATO clearance certificate is required!
Contracts dated 1 July 16 on wards, will have the new requirements on ALL transactions with market value of $2 million or over.
Unless the Seller provides an Australian Taxation Office (ATO) 'clearance certificate' for each registered proprietors name (matched to the title) to the buyer 2 business days prior to settlement (-timing subject to REIWA special condition).
Then the Buyer must withhold 10% of the Purchase price (more specifically the 'First element of the cost base'-Capital Gains Tax defined term) from the Seller and apply for an ATO Payment Reference Number (PRN) then remit that payment to the ATO once settled, and before Title registration.
Even if Selling or Buying a percentage, where a total property value (aggregated/extrapolated) $2 million or more would likely impact that transaction.
Designed to catch Tax evaders, the new law places liability on the Buyers to withhold payment from the Seller unless they are given a clearance certificate, or exempted by approved variation.
WA Settlement Agents are not allowed to apply for the Clearance Certificate, or variation. This will need to be done by the Seller or their Tax agent.
Online application may be found here... could take anywhere from 2-28 days.
Each clearance certificate remains valid for up to 12 months and is able to be used on other property in the same name, during that period.
For your ATO conveyancing guide you can download a copy HERE...
For video information the ATO have also created videos available on You Tube.
The videos have been divided into the individual topics of:
› Residency and tax obligations
› Changes to foreign investment
› Non-resident withholding capital gains tax
For more information speak to your tax accountant &/or check with A1 Conveyancing if it might apply to you.
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