Foreign Resident Capital Gains Withholding Rate Increased and the Threshold Reduced
Currently when someone purchases Australian real property (ie, land and buildings) they are currently required to remit 10% of the purchase price directly to the ATO as part of the settlement process unless the vendor provides a certificate from the ATO indicating that they are an Australian resident for tax purposes.
You only need to provide a foreign resident capital gains withholding clearance certificate if the property is worth more than $2 million. From 1 July 2017, the withholding rate under these rules will increase by 2.5% to 12.5% and the foreign resident withholding threshold will reduce from $2 million to $750,000, capturing a greater number of taxpayers and property transactions.
If you need help acquiring a foreign resident capital gains withholding clearance certificate, please contact us today.