What is it?
Introduction of new tax regime under Tax and Superannuation Laws Amendment (2015 Measures No. 6) Act 2016 whereby when a foreign resident sells certain taxable Australian property, the purchaser of such property will be required to withhold 10% of the purchase price and pay that amount to the Australian Taxation Office (ATO).
Who is effected?
Foreign resident vendor and their respective purchaser selling/buying property including real property, lease premium and options to purchase such property with market value above AUD $2 million.
The applicable vendors may apply to the ATO for Clearance Certificates which could be served on the purchasers before settlement. Also vendors who believes 10% withholding is inappropriate may contact the ATO to make a Variation Application varying the withholding rate.
The new regime is due to be introduced on 1 July 2016.