April 2016 Edition
In this edition:
Property acquisitions from foreign residents
New tax affects property, shares and trusts
New legislation has been passed which states that a 10% non-final withholding tax must be sent to the ATO if the seller of an asset is a foreign resident.
Effective from 1 July 2016, the 10% non-final withholding tax applies to anyone purchasing real property worth $2 million or more. The amount that is to be withheld by the purchaser is 10% of the purchase price.
If the seller is an Australian resident and wants to avoid 10% being withheld, they must provide the purchaser with a "Clearance Certificate" issued from the ATO to prove that they are an Australian resident.
The big catch is that it is the vendor's (purchasers) responsibility to obtain a Clearance Certificate. Otherwise the purchaser must withhold funds and remit 10% of the purchase price to the ATO.
The ruling does not only apply to purchase of real property. It also includes the purchase of shares in a company or units in a trust where the entity predominately owns real property. This is referred to as an indirect real property interest.
An exemption will apply if:

- The purchase of shares/units is on an approved stock exchange
- There is no indirect real property interest
- The seller is an Australian resident
Please contact your Goodwin Chivas & Co team member for further information.
