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.
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
The important issue being that the ATO have 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.
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?
|You should:||Discuss with your solicitor or conveyancer the need for a clearance certificate
Contact us if you require any clarification or advice.