Buying or Selling Property over $2 million? As of 1 July 2016, the sale of real property with a market value of $2 million or over will attract a 10% non-final withholding tax unless a clearance certificate from the Australian Taxation Office (ATO) is obtained.
Australian residents will need to obtain a Clearance Certificate from the ATO and provide it to the purchaser prior to settlement to avoid the tax implication.
On the other hand, foreign residents may apply to the ATO for a variation to the 10% non-final withholding tax. Once the variation has been approved, the variation notice will need to be provided to the purchaser prior to settlement.
Vendors may claim a credit for the withholding amount paid to the ATO against the final tax assessment in their income tax return.
If you are purchasing a property with a market value of $2 million or above, the ATO will require you to withhold 10% of the purchase price until settlement. Thereafter, you will be required to pay it to the ATO.
This will not apply if the vendor provides you with a Clearance Certificate.
The withholding tax may be varied to less than 10% if the vendor provides a variation notice from the ATO prior to settlement.
The purchaser will be required to pay the amount withheld at settlement to the ATO.
If you have any questions, please do not hesitate to contact our Conveyancing team on (02) 9728 3366.