Foreign resident CGT withholding

Foreign resident CGT withholding measure – from 1 July

From 1 July 2016, the Commonwealth Government’s foreign resident capital gains tax withholding measure will apply to the acquisition and disposal of certain taxable property. Practitioners need to be aware that the legislation applies to a range of transactions beyond the sale of taxable Australian real property.

The new measure means that the acquirer of certain interests in property must withhold 10% of the cost base of the asset that is being acquired. Generally, the ‘cost base’ will be the purchase price for the asset although the particular ‘cost base’ will depend on the nature of the transaction.

For property transactions, buyers of Australian real estate valued at $2m or over must retain 10% of the purchase price and pay this amount as withholding tax to the ATO, unless the seller produces an ATO clearance certificate or a variation notice prior to settlement.

However, there is no threshold amount for other transactions covered by the legislation, including the acquisition of interests in land-rich entities or for the grant of options.

To prepare for the new measure, QLS is:

  1. Working with the REIQ to update the standard REIQ/QLS contracts – Members will be advised when the new contracts are available
  2. On 5 July 2016, presenting the webinar New Withholding Tax Regime for Australian Property.

The Australian Tax Office is also presenting a webinar on 16 June 2016. Details are available here.

More information is also available from the Australian Tax Office


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