The new withholding regime applies to contracts entered into on or after 1 July 2016.
The regime imposes an obligation on a purchaser who purchases certain types of Australian assets with a market value of at least $2 million from foreign residents to collect and remit 10% of the purchase price to the Australian Taxation Office (ATO).
The Australian assets affected include:
- Real property in Australia – land, buildings, residential and commercial property
- Lease premiums paid for the grant of a lease over real property in Australia
- Mining, quarrying or prospecting rights
- Interests in Australian entities whose majority assets consist of the above such property or interests
- Options or rights to acquire the above property or interests
Under the regime all vendors will be deemed to be foreign residents unless they can prove otherwise through the provision of a Clearance Certificate from the ATO. Vendors can apply for a Clearance Certificate at any time. Clearance Certificates will be valid for 12 months and must be valid at the time the certificate is given to the purchaser prior to settlement.
Applications for Clearance Certificates must be made online to the ATO.
For more information please contact our friendly and professional team at Peter Speakman & Co on 9822 8611.