31 Jul Property over $750 000 needs ATO clearance certificate to avoid 12.5% tax
All vendors selling property over $750,000 are required to obtain an ATO Clearance Certificate
These new changes will apply to contracts entered into on or after 1 July 2017.
What are the upcoming changes?
From July 1, the FRCGW withholding tax rate increases to 12.5% from 10%. This applies to properties where the purchase price is $750,000 and above, where it previously applied to properties over the purchase price of $2 million.
The existing threshold and rate will apply for any contracts that are entered into before 1 July 2017, even if they are not due to settle until after 1 July 2017.
What you need to do to avoid the 12.5% tax:
Australian residents can avoid the 12.5% withholding tax rate by providing one of the following:
- When selling property over $750,000, you will need to obtain an ATO Clearance Certificate from the Australian Taxation Office and provide this to the purchaser prior to settlement,
- For other asset types, a vendor declaration is required to prove you are not a foreign resident.
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