From 1 July 2017 even more purchasers of real property in Australia will need to be aware to the residency status of the seller due to the changes in requirements for foreign resident capital gains withholding.
The CGT withholding threshold on property transactions has decreased from 1 July 2017 from $2 million to $750,000 and the withholding rate has increase from 10% to 12.5%. Which rate and threshold that is to be used is dependent upon when the contract is entered into and not when the transaction is due to be settled.
As previously reported in our blog on the CGT Withholding for Property Transactions sellers will need to obtain a 'Foreign resident capital gains withholding clearance certificate' in order for the purchaser to not retain a percentage of the purchase price. If property is owned by multiple entities each entity is require to obtain their own certificate.
The ATO has also released a Capital gains withholding – guide for conveyancers on what needs to be considered when selling Australian properties.
Only legal practitioners and registered tax agents can lodge clearance certificates on behalf of a vendor. Conveyancers can provide a PDF version of the certificate for the vendor to complete themselves. However it is always recommended to seek professional advice, prior to any significant transaction.