Foreign resident capital gains Young Property Group August 31, 2016

Foreign resident capital gains


Important: From 1 July 2016 Australian residents selling real estate with a market value of $2 million or more will need to apply for a clearance certificate from the Australian Taxation Office (ATO) to ensure amounts are not withheld from the sale proceeds. Where a valid clearance certificate is not provided by settlement, the purchaser is required to withhold 10% of the purchase price and pay this to the ATO.

What this means for sellers

Australian resident vendors who dispose of Australian real property with a market value of $2 million or above will need to apply for a clearance certificate from the ATO to ensure amounts are not withheld from their sale proceeds. All transactions involving real property with a market value of $2 million or above will need the vendor and purchaser to consider if a clearance certificate is required. If a purchase price negotiated between a purchaser and vendor is on an ‘arm’s length basis’, then the purchase price may be used as a proxy for market value. * Note: The legislation specifies that the 10% withholding is on the ‘first element of the cost base’. However, as purchase price is understood by vendors and purchasers, and in many instances will be equal to the ‘first element of the cost base’, we have used the term purchase price for simplicity.

For more information please download the PDF below