We take a closer look into the latest update from the ATO.
The ATO has introduced a 10% withholding rate on payments made to foreign residents under contracts entered into on or after the 1 July 2016 who dispose of certain taxable Australian property valued at $2 million and over.
The legislation was introduced to ensure non residence met their capital gains tax obligations on Australian property.
This means for Australian residence who are selling property over $2 million will need to obtain a clearance certificate from the ATO. The certificate will confirm that you are in fact an Australian resident and that the 10% withholding does not apply.
Clearance certificates are valid for a 12 month period, thus we would encourage those with a selling applicable property not to wait until the last minute to ensure that the withholding rules don’t apply.
For further details on this matter please contact your advisor.