New tax rules for property sales over $2 million

Australian residents buying or selling real property with a market value of $2 million or more need to be aware of new rules which come into effect on 1 July 2016.

Assistant Commissioner Malcolm Allen said Australian residents who are selling a taxable Australian property with a market value of $2 million or more need to obtain a clearance certificate from the ATO, to confirm a 10 per cent withholding amount does not need to be withheld from the transaction.

“The seller needs to provide a clearance certificate to the buyer by settlement, or the buyer will be required to withhold 10% of the sales price and pay this to the ATO,” Mr Allen said.

“We encourage all Australian residents who are looking to sell property with a value of $2 million or more to apply for a clearance certificate as early as possible.

“It is easy to obtain a clearance certificate. The form is available to download through our website, and there is no fee for clearance certificate applications.”

Clearance certificates are valid for 12 months from issue, and must be valid at the time it is made available to the buyer.

Penalties apply where sellers make false or misleading declarations to the ATO, or where the buyer fails to withhold when they should.

The ATO has been working with real estate agents, conveyancers and legal practitioners to ensure the industry is aware of how to help their clients meet their withholding obligations.

The new rules have been introduced to ensure foreign residents meet their capital gains tax liabilities. Amounts withheld will be credited against their final income tax liability assessed on foreign residents’ income tax returns.

More info can be found here: CLICK HERE

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