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a change of legislation that could impact your Settlement

30 Jun 2017 prowest 0 Comment

We wish to bring to your attention a change of legislation that could impact your settlement and the proceeds from your sale.

The government in the 2017 budget papers changed the Foreign Investors’ Capital Gains Tax Withholding Provisions on contracts written from 1st July 2017.

From this date all persons selling a property for a value in excess of $750 000 will be subject to 12.5 % withholding tax unless they have received a clearance certificate from the ATO (Australian Tax Office). As this applies not only to foreign investors, the name may seem misleading, however it applies to ALL.

In order to obtain a clearance certificate (which is currently free) you can do one of two things.
1. You can complete a paper form and mail it to the department for processing (see attachment)
2. Complete a clearance certificate request online.
This will be processed more quickly than option two and will help ensure that your settlement occurs without delay or withholding.
We would recommend that you use the online method.

However, we have included both a link for the online certificate request below; a pdf copy of the application and the government’s information sheet above.

Whilst you will need to provide this to your settlement agent prior to settlement it is valid for a year so getting it done as early as possible is definitely the way to go.

Please note: Providing this certificate to the buyer through your settlement agent is your responsibility. If not done then the buyer is obligated to pay 12.5% to the Tax Office.
This is $93750 on a $750000 so it is very substantial. Please deal with this as a matter of importance.

If you are not a foreign investor you can claim it back but it could still leave you with a cash shortfall at settlement. This is very important for those using the proceeds to purchase their next property.

Should you have any difficulties with completing the form please, check this link or ask your Prowest sales representative.

Kind regards
Paul S Rayner
Principal / Licensee at Professionals Prowest Real Estate

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