ATO Capital Gains Withholding Regime
1st August, 2017
You may have heard, but there have been some changes to the Capital Gains Withholding Regime from the ATO, that have taken effect from the 1st July 2017, this is important to most sellers in our area. Please read below and should you have any questions regarding this or would like some more information, donât hesitate to give us a call.
Impacts on both foreign and Australian residents
The Australia Tax Office (ATO) has a withholding regime that attempts to ensure people, who are deemed foreign residents, and sell property are paying their capital gains tax obligations prior to the proceeds from the sale being moved off-shore.
Important changes have now taken effect as of 1st July 2017. These changes now apply to ALL sellers, foreign and Australian, where a property purchase price is $750,000 or more.
What do sellers have to do prior to settlement?
Â·Â Â Â Â Â Â Â Sellers (individuals and companies) must apply to the ATO for a Clearance Certificate.
Â·Â Â Â Â Â Â Â Give the Clearance Certificate to the buyer and their conveyancer / settlement agent prior to settlement.
What does the ATO do?
Â·Â Â Â Â Â Â Â The ATO will determine if the seller is deemed a foreign resident.
Â·Â Â Â Â Â Â Â The ATO should issue a Clearance Certificate to all applicants who are not foreign residents.
(Please note there may be delays in the ATO issuing a Clearance Certificate if there are outstanding taxation returns or other unresolved matters with the ATO)
If a Clearance Certificate is not supplied prior to settlement the ATO will withhold 12.5% of the purchase price until they complete their assessment of any capital gains tax liability.
To apply for a Clearance Certificate or for more information, visit: www.ato.gov.au and search for: Impacts on Foreign and Australian residents.