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Latest Case

Assisting on whole of government technology agreements November 2, 2017

Maddocks advised the Commonwealth Government’s Digital Transformation Agency (DTA) on its whole of government purchasing agreement with SAP. The DTA was set up in 2015 to assist government departments and agencies with digital transformation and … Continued

Latest News

Making waves: Maddocks advises on Manly Fast Ferry sale February 12, 2018

Monday 12 February 2018 Maddocks has advised the founders and operators of the Manly Fast Ferry on their divestment of the company to NRMA, Australia’s peak road association. The firm advised Richard and Will Ford, … Continued

Latest Article

Radio Refunds: How to avoid breaching your responsible lending obligations February 15, 2018

Background Major Australian retailer, Thorn Group, and its consumer leasing business, Radio Rentals, has agreed to refund almost $20 million to customers who entered into leases with the company following an ASIC investigation into breaches … 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.