35% of SMEs recruiting despite weaker sentiment
Despite battling to find staff and contending with rising inflation and cost-of-living expenses small businesses are...READ MORE
Foreign residents disposing of Australian property will have to withhold 10 per cent of capital gains proceeds to the ATO under new measures before federal parliament, a leading law firm has claimed.
Stuart O'Neill, principal lawyer at Creevey Russell Lawyers, stated that the capital gains tax (CGT) withholding obligation will apply to residential and commercial property, mining, quarrying or prospecting rights and interests in Australian entities, with the legislation originally announced by the Gillard Labor government in May 2013.
"Laywers, conveyancers, agents and brokers acting for affected foreign resident vendors will need to include the withholding obligation in their sales contracts," said Mr O'Neill.
"The withholding regime will not affect property transactions under $2 million (thus excluding most residential property sales), transactions completed on an approved stock exchange or disposals by a foreign resident who is bankrupt under external administration."
According to Mr O'Neill, lawyers and conveyancers will be able to apply for a 'clearance certificate' from the ATO to determine whether the amount must be withheld in a transaction.
"It will be the vendor's obligation to produce the certificate prior to settlement to absolve a purchaser from the obligation to withhold.
"When purchasers withhold, they will have to pay the amount to the ATO with a remittance form that sets out the details of the vendor, the purchaser and the asset required. While the withholding regime is intended to protect the integrity of the CGT regime, it may equally apply where the disposal is likely to generate revenue gains taxable as ordinary income," Mr O'Neill concluded.