Changes to ATO Capital Gains Tax Withholding Could Affect You!

Alex Harris - Noosa4Sale - 20-Sep-2017

Changes to ATO Capital Gains Tax Withholding


There has been a lot of confusion about this new tax regulation, brought in July 1st  2016.  Most people believe this applies to Foreign Residents only.   

While it is intended to capture CGT from foreign residents, all vendors with properties that exceed the threshold value have to prove they are an Australian resident for tax purposes.

Australian resident vendors selling real property will need to obtain a Clearance Certificate from the ATO to ensure they don't incur a 12.5% withholding tax. 

It applies to all vendors in all states and territories, to all property (residential and commercial) with a contract price of $750,000 or more and other asset classes.

If you are an Australian resident for tax purposes (I.e. you pay taxes in Australia, regardless of your nationality) you must apply for an ATO Clearance Certificate that ideally is delivered to the purchaser by the selling agent on the exchange of contracts or at least prior to settlement. 

Your Clearance Certificate is valid for 12 months. 

If an ATO Clearance Certificate is NOT available at settlement the buyer is obliged to withhold 12.5% of the sale value, for immediate payment to the ATO.   

Yes, the buyer becomes the tax collector, and must forward said withholding to ATO within days of settlement.   

For sales effected in the 12 months July 1 2016 to June 30 2017 with a contract date prior to June 30th this year, the sale value remains $2m or more and the tax 10% - even if those contracts have not yet settled.  From July 1st 2017, it is a sale value of $750,000 or more and 12.5% withholding. 

Australian resident vendors of real property can avoid the 12.5% withholding tax by providing the Clearance Certificate obtained from the ATO.  For the sale of other asset types, a vendor declaration they are not a foreign resident is all that is required. 

Foreign resident vendors may apply for a variation of the withholding rate or make a declaration that a membership interest is not an indirect Australian real property interest and therefore not subject to withholding. 

Purchasers must pay the amount withheld to the Commissioner of Taxation at settlement. Significant penalties apply for non-compliance and the liability rests with the buyer. 

It appears the ATO had an immediate windfall of discovering property assets that did not match declared incomes of Australian residents and hence the threshold was dropped from $2m to $750,000 and the tax increased from 10% to 12% July 1st 2017.

Please share this with anyone you know selling or thinking of selling.  

And if perchance you purchased property for a contract price of $2m or greater in the past 12 months without receiving a Clearance Certificate from the vendor at settlement, you are liable to pay the ATO 10% of the sale price - and if not yet paid - that may be increased with interest and penalties.  Please talk to your tax advisor ASAP.  If in doubt see this: https://www.ato.gov.au/General/Capital-gains-tax/I...

Get your Clearance Certificate here: https://www.ato.gov.au/FRWT_Certificate.aspx

Let me know if I can assist you in any way with your real estate needs in Noosa.


Featured Property:  20 Grevillea Lane Cooroy


A great opportunity to buy below replacement cost. This beautiful property must be sold!  Suit buyers over $2m.

Located just 12 minutes from Noosaville and 5 minutes from the picturesque Noosa Hinterland town of Cooroy, the 15 acre Grevillea Park is one of the best horse properties in Noosa today.

Straight off the pages of Architectural Digest in its style with dual living, the main house has 3 bedrooms and 3 bathrooms, plus 2 separate fully self-contained ground floor apartments for guests, income, caretaker and/or extended family.

Located down a tree-lined private lane off Pine Tree Drive East, the grand 520sqm home has a commanding position atop a ridge line, enjoying views of Mount Cooroy, Mount Tinbeerwah, Mount Eerwah & Lake Macdonald.

For the discerning buyer looking for quality construction and finishes over cosmetic makeovers, this is the property for you.

Reluctantly on the market and priced to sell, the one-of-a-kind home includes:

* Swarovski crystal chandelier, granite, Jarrah timber, marble, 100% wool carpet
* Imported glazed terracotta roof tiles, bespoke brickwork
* NBN connected, back-to-base security, Bose surround sound
* Ducted air, screens on all doors and windows, wood & gas fireplaces
* Single & 3 phase power at house, garage & stables
* 10kW solar power generation
* 90k litres rainwater water in underground tanks, 10k at stables
* Olympic size (60mx20m) dressage arena with flood lights
* ECOGRID® Arena System, dam-fed arena sprinkler system
* 7 pasture improved paddocks with horse-safe flexor fencing
* Double shelters, automatic water troughs, gate mats, sprinklers
* Stables with hardwood walls, large tack room, horse crush
* Machinery room, attached horse float & truck or caravan carport
* Truck access off Pine Tree Dr for unloading livestock & feed
* Orchard with established fruit trees

The property stretches from the ridge where the house is located to the flats at the bottom of Pine Tree Drive with dual access and all well above the flood level of the creek and water catchment reserve. Potential subdivision may be possible STCA if you prefer to on-sell the equestrian assets.

It is the back of the property you will see first as you come around the bend on Pine Tree Drive. For inspection, continue up the hill, turn right onto Pine Tree Drive East, and follow that to Grevillea Lane.

See more https://www.noosa4sale.com.au/property/20-grevillea-lane-cooroy-qld-4563/