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We work collaboratively with our clients to build strong, sustainable relationships. Our team is committed to delivering consistent high standards of service, and we understand the importance of accessibility. Working with us, you'll enjoy open communication, meaning well scoped, properly resourced and effectively managed matters.

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Latest Case

Advising global cryptocurrency exchange operators on entry into Australian market July 31, 2018

The rise in popularity and demand for cryptocurrency trading has resulted in a number of cryptocurrency exchange operators expanding into different countries, including Australia, to create a global brand. In Australia, new laws and regulations … Continued

Latest News

Maddocks advises French firm on major construction company acquisition August 6, 2018

Monday 6 August 2018 Law firm Maddocks recently advised French firm Bouygues Construction on its acquisition of leading Australian construction and fitout business AW Edwards. The acquisition is a key part of Bouygues’ continued expansion … Continued

Latest Article

Do your construction documents conform with the new Ministerial Directions and Instructions for Public Construction Procurement? August 15, 2018

Are you a state government department or public body which procures public construction works and services? Are you in the process of determining which form of contract will be most appropriate for your procurement to issue … Continued

Non-final withholding tax regime

From 1 July 2016, changes will come into effect to Australia’s withholding tax rules that may require purchasers of Australian real property to withhold 10 percent of the purchase price, otherwise payable directly to the vendor, and pay this directly to the Australian Taxation Office (ATO). Broadly, the new withholding regime will:

  • apply where the vendor is a foreign resident, but will have practical implications for all Australian real property transactions with a market value of $2 million or greater
  • apply to all types of Australian real property transactions (residential, commercial, industrial, etc.)
  • apply in all states of Australia
  • not change any GST or duty calculations on acquisitions of Australian real property
  • also impact acquisitions of interests in landholding companies and trusts, and options to acquire Australian real property or interests in landholding companies and trusts.

If a purchaser fails to withhold and pay this amount to the ATO, penalties and interest can apply.

Implications for purchasers

For all acquisitions of Australian real property with market value of $2 million or greater, purchasers will need to obtain a clearance certificate from the vendor confirming the vendor’s status as an Australian resident for tax purposes. If a clearance certificate is not obtained, purchasers will be required to withhold 10 percent of the purchase price and pay this directly to the ATO. 

Implications for vendors

Australian resident vendors of Australian real property with market value of $2 million or greater will need to apply online for a clearance certificate confirming their status as an Australian resident for tax purposes. The ATO will be automating this process and expects clearance certificates to be issued within 1 – 14 days in straightforward cases, with a longer processing time for more unusual or higher risk cases. Clearance certificates can also be obtained in anticipation of a transaction (even prior to listing a property for sale) and will be valid for 12 months.

If no clearance certificate is provided, the purchaser is required (by default) to withhold 10 percent of the purchase price, meaning the vendor will only receive 90 percent of the purchase price. The withheld amount is effectively a ‘prepayment’ of tax and a credit for the amount withheld (and paid to the ATO) is able to be claimed in the vendor’s income tax return.

Should you wish to discuss any aspect of the new withholding regime, please contact a member of our Tax and Revenue team.

From 1 July 2016, changes will come into effect to Australia’s withholding tax rules that may require purchasers of Australian real property to withhold 10 percent of the purchase price, otherwise payable directly to the vendor, and pay this directly to the Australian Taxation Office (ATO). Broadly, the new withholding regime will:

  • apply where the vendor is a foreign resident, but will have practical implications for all Australian real property transactions with a market value of $2 million or greater
  • apply to all types of Australian real property transactions (residential, commercial, industrial, etc.)
  • apply in all states of Australia
  • not change any GST or duty calculations on acquisitions of Australian real property
  • also impact acquisitions of interests in landholding companies and trusts, and options to acquire Australian real property or interests in landholding companies and trusts.

If a purchaser fails to withhold and pay this amount to the ATO, penalties and interest can apply.

Implications for purchasers

For all acquisitions of Australian real property with market value of $2 million or greater, purchasers will need to obtain a clearance certificate from the vendor confirming the vendor’s status as an Australian resident for tax purposes. If a clearance certificate is not obtained, purchasers will be required to withhold 10 percent of the purchase price and pay this directly to the ATO. 

Implications for vendors

Australian resident vendors of Australian real property with market value of $2 million or greater will need to apply online for a clearance certificate confirming their status as an Australian resident for tax purposes. The ATO will be automating this process and expects clearance certificates to be issued within 1 – 14 days in straightforward cases, with a longer processing time for more unusual or higher risk cases. Clearance certificates can also be obtained in anticipation of a transaction (even prior to listing a property for sale) and will be valid for 12 months.

If no clearance certificate is provided, the purchaser is required (by default) to withhold 10 percent of the purchase price, meaning the vendor will only receive 90 percent of the purchase price. The withheld amount is effectively a ‘prepayment’ of tax and a credit for the amount withheld (and paid to the ATO) is able to be claimed in the vendor’s income tax return.

Should you wish to discuss any aspect of the new withholding regime, please contact a member of our Tax and Revenue team.