As from July 1, 2017 the changes to this legislation will apply to contracts entered into on or after 1 July 2017 for real property disposals where the contract price is $750,000 or more. Contracts entered into prior to July 1 are exempt
The following matters should be noted:
1. Rules will apply to sales at $750,000 and above.
2. The Buyer has an obligation to deduct 12.50% withholding tax on the sale price unless the seller can supply a FOREIGN RESIDENT CAPITAL GAINS WITHHOLDING CLEARANCE CERTIFICATE.
3. If it is partnership selling the property then all the partners must apply for a clearance certificate in their own name.
4. If it is a trust or superannuation fund selling the property then the trustees must apply for the clearance certificate in the Trustees’ name. 5. Clearance certificates once granted only are valid for a twelve month period What makes this requirement confusing as the name given to these certificates, because it is in fact Australian residents who need to apply for the clearance certificate so that tax is not deducted at the time of sale.
It is imperative that you give this advise to all your Sellers.
It is best to have the Sellers acknowledge this requirement has been brought to their attention and if they wish to obtain further information they should address their enquiries to the Australian Taxation Office.
Nevertheless we should ensure that we have informed the Seller/s of the ATO requirement.
Furthermore all the Agents have an obligation to bring this requirement to the attention of a Buyer.
All the Agencies should have the appropriate forms to inform Sellers and Buyers