Are you selling or looking at selling property that is valued at $2 million or more?
Those who are looking at selling property valued at 2 million or more, need to be mindful of new rules that will be applicable from the 1st of July 2016 onwards.
What needs to be done?
In order to sell such property a clearance certificate needs to be provided to the buyer prior to settlement or the buyer will be required to pay 10% of the sale price to the ATO. As an alternative, the form can be completed by one of our accountants on your behalf.
It’s important for all those who intend to sell their property (valued at $2m or over) to apply for a clearance certificate as soon as possible. The processing times for these applications can take between 2-4 weeks and it is absolutely necessary that a clearance form is completed well before the settlement date, to be presented on settlement.
What happens next?
Once the clearance certificate has been issued, it will remain valid for 12 months from the issue date. Your valid certificate must be present at settlement to avoid the withholding amount of %10 of the selling price being paid to the Australian Taxation Office.
Penalties will apply when sellers attempt to mislead the ATO with inaccurate, or false declarations, or where the buyer fails to withhold when they are required to.
Your valid certificate must be present at settlement to avoid the withholding amount of %10 of the selling price being paid to the Australian Taxation Office.
Do I need to know this new law inside out?
This new law has been brought up with real estate agents, conveyancers, and legal practitioners; so if you find yourself selling a property, all of the industry professionals you work with to sell your property will be fully aware of what they need to do to meet the specifications of this new law, to help you meet your withholding obligations.
The new rules have been introduced in order to make sure that foreign residents are meeting their capital gains liabilities.
Kristian is currently studying a Bachelor of Business at WSU and wants to become a Chartered Accountant to continue learning in all areas of accounting.