If you are selling a property worth $750,000 or more, the Buyer may be required to pay 12.5% (or a lesser amount) of the purchase price to the ATO unless you comply with new laws. Failure to do so can have serious consequences.
The Australian Government introduced new laws targeted at preventing foreign residents from selling land in Australian 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. Click here for a brief summary of the laws and how they impact you.
If you do not produce a valid Clearance Certificate or Variation Notice from the ATO before settlement, the Buyer is required to pay 12.5% (or a lesser amount) of the purchase price to the ATO, called the CGT Withholding Amount. This can have serious consequences including being sued because you are unable to discharge your mortgage or complete settlement. Here are some tips to avoid the pitfalls of these new laws: