If you are selling a property worth $750,000 or more the Buyer may be required to pay 12.5% of the purchase price to the ATO unless Sellers comply with new obligations under new laws and the Standard Contract.
The Australian Government introduced new laws targeted at preventing foreign residents from selling land in Australia and avoiding paying capital gains tax (CGT).
The laws apply to contracts entered into on or after 1 July 2017 where the property sold has a market value of $750,000 or more.
In short, the Buyer must pay 12.5% of the purchase price to the ATO (called the CGT Withholding Amount) unless the Seller obtains from the ATO either a Clearance Certificate (which confirms the Buyer does not have to pay any part of the purchase price to the ATO) or a Variation Notice (which reduced the amount of the purchase price that the Buyer has to pay to the ATO).
Not complying with this law has some serious consequences for both sides:
For more information and tips on how to avoid the pitfalls of these new laws, click here for Buyers and click here for Sellers.