Australia has a new regime that imposes withholding obligations on the purchasers on certain Australian assets. The legislative amendments contained in the Tax and Superannuation Laws Amendment (2015 Measures No 6) Bill 2015 has passed all stages of Parliament without amendment (and is awaiting Royal Assent). This Bill will enact into law a new foreign resident CGT withholding tax (WHT).
Writing in Thomson Reuters inTAX magazine, Dung Lam, Senior Associate, McCullough Robertson, provides a “cheat sheet” featuring practical tips on the changes for advisers. Broadly, this WHT requires a purchaser of an Australian real estate asset to withhold and remit to the Tax Office 10% of the purchase price paid to a foreign resident vendor. The WHT was introduced due to a concern that foreigners were not paying their fair share of tax when they disposed of Australian assets.
Lam writes that it is important to recognise that this new WHT covers more than just Australian land – the WHT can apply to interests in companies and trusts which are “Australian land rich” and options covering such interests and Australian land. Additionally, she notes that Australian resident vendors of land or company title interests may be affected by the WHT if they do not obtain a Tax Office clearance certificate by settlement. This is so even though the WHT is aimed at foreign residents.
The foreign resident CGT WHT applies to sales contracts and option agreements entered into on or after 1 July 2016. Professionals who deal with property, non-listed company shares and unit trust transactions need to take into account the impact of this WHT.
See the full article in Thomson Reuters inTAX magazine (March 2016 issue).
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