Subscribe to our Newsletter
Important information that could save you thousands
If you are buying a property for $750,000 or more after 1 July 2017 your solicitor or conveyancer will have to ensure that the vendor obtains and provides a clearance certificate from the Australian Taxation Office (ATO). This is information that could save you thousands.
When selling Australian property, the new rules will assume the seller is a non-resident unless they have a clearance certificate from the ATO.
What is expected of the purchaser if no clearance certificate is obtained?
Without this clearance certificate, the purchaser must withhold 12.5% of the purchase price and pay this to the ATO.
Changes lowered the property value threshold from $2 million to $750,000, so more people than ever before will be burdened with this administrative process.
What happens if a purchaser does not withhold?
The important issue being that the ATO has advised that “buyers could face a penalty if they did not withhold when they should.” There are also penalties for purchasers failing to pay the amount on time.
Where an amount is required to be withheld, a purchaser will be required to pay the amount to the ATO at or before settlement.
What you should do if no valid certificate is provided?
If you are purchasing property with a market value of $750,000 or above and a valid certificate is NOT provided:
- You need to withhold 12.5% of the purchase price and pay it to the ATO unless the seller provides you with a clearance certificate.
- You may vary down the 12.5% non-final withholding tax if the seller provides you with a variation notice from the ATO prior to settlement.
What should you consider?
Discuss with your solicitor or conveyancer the need for a clearance certificate
Contact us if you require any clarification or advice.
Check out another recent blog in this category.
Need more info?