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Capital Gains Withholding Tax

In an effort to combat tax avoidance by foreign residents in 2016 the Federal Government introduced new laws requiring the purchasers of real estate worth $2 million or more to withhold 10% of the purchase price at settlement and remit it to the ATO unless the seller of the property gave the purchaser a “Clearance Certificate”. 

The $2 million threshold that applied when these new laws were initially introduced has been reduced to $750,000.00 from 1 July 2017. The rate has also increased from 10% to 12.5%. This means that for contracts entered into on or after 1 July 2017, where the sale price is more than $750,000.00 the purchaser must withhold 12.5% of the purchase price and remit it to the Australian Taxation Office unless the vendor has supplied a Clearance Certificate. There are no exceptions to this law, it applies to all properties including private homes. 

If you are selling a property, and it is likely that the sale price will be more than $750,000.00, you must apply to the ATO for a Clearance Certificate as soon as possible. There may be some delays in the ATO processing applications for Clearance Certificates, and any delays in that process could mean that the Clearance Certificate has not been issued before the settlement of your sale, in which case the purchaser will be required to withhold 12.5% of the sale price at settlement.

We are able to apply on your behalf to the ATO for the issue of a Clearance Certificate.

Published 7 July 2017

For further advice or assistance

Contact Paul Stephens on 5337 0262 or pstephens@nevetts.com.au

The information in this publication or on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances.
The information on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances. Nevett Ford do not warrant that information contained in links to third party sites are correct and accept no responsibility for the accuracy and reliability or any other matter in relation to a third party site.