CAPITAL GAINS WITHHOLDING TAX: CHANGES TO THE OBLIGATIONS FOR FOREIGN AND AUSTRALIAN RESIDENTS
Currently, in all property transactions where the property is worth more than $2 million, 10% of the purchase price is required to be withheld and transferred to the ATO where the vendor is a foreign or temporary resident.
Given the median house price in New South Wales is approximately $800,000 to $900,000 these obligations apply to only about 11% of Australian properties currently.
From 1 July 2017 the rules will apply to all properties that are sold for $750,000 and the rate increases 12.5%. This means the rules apply to approximately 64% of Australian properties.
In order not to pay the tax, Australian citizens will have to obtain a clearance certificate to prove they are not a foreign resident otherwise the tax will be withheld at settlement.
Once again the Government is shifting its burden for tax collection to solicitors and conveyancers and the labour costs of doing so will have to be met by our clients.