Recent changes to taxation laws mean that anyone purchasing or selling property may have an obligation to withhold tax, or find that they have tax withheld from their settlement proceeds!
The ‘Foreign Resident Capital Gains Withholding’ regime has been in place since 1 July 2016 for property purchases and sales of $2 million or more, however changes to the property value threshold from 1 July 2017 mean this regime now applies to any property transactions of $750,000 or more.
The name of the regime is misleading in a couple ways:
The key points of the regime are:
What you need to do
If you have entered into a contract to purchase or sell property (house, land, commercial property – anything) since 1 July 2017 contact us now!
We will help you work out whether a clearance certificate is required and if required help with the process of obtaining the certificate.
Remember this is extremely important for both vendor and purchaser! The purchaser has the obligation to withhold, but if the vendor doesn’t act they may miss out on 12.5% of the proceeds until the next tax return is lodged!
Failure to comply with the requirements of the law can result in huge cash penalties being imposed by the Tax Office. Don’t risk it – talk to your accountant first!