A tax grab of biblical proportions…
Anyone buying or selling property in Australia with a value of $2 million or more is caught by new tax collection rules from 1 July 2016.
Vendors selling property for $2m or more must obtain a CGT “clearance certificate” from the Australian Taxation Office (ATO) confirming that they ARE NOT a foreign resident. This certificate will exempt them from the 10% withholding amount applied to foreign residents.
If the clearance certificate is not provided to the purchaser before settlement the purchaser must withhold and pay 10% of the purchase price to the ATO.
To avoid delays, vendors should apply for a clearance certificate immediately when they decide to sell. Clearance certificates are valid for 12 months – the form is on the ATO website and there is no application fee.
The name on the clearance certificate must match the name on the Certificate of Title. The purchaser does not have to accept the clearance certificate if there is a discrepancy. If the vendor's current legal name doesn't match the name on the Certificate of Title, the vendor must provide evidence of the change of name (eg a change of name certificate or marriage certificate).
Thus finishes the lesson: prestige property vendors sans a CGT clearance certificate will find their buyer rendering unto the ATO what is Caesar’s.
Clark McNamara Lawyers is a team of experienced commercial and residential property law solicitors.