The Australian government has introduced a new withholding measure to assist in the collection of foreign residents Capital Gains Tax (CGT).
The new measure applies to transactions entered into from 1 July 2016. The new measure requires a purchaser to withhold 10% of the first element of the costs base (usually the purchase price) and pay it to the ATO when acquiring certain Australian assets from a foreign resident.
The new measure applies to the acquisition of the following types of assets:
- taxable Australian real property;
- an indirect Australian real property interest (such as acquiring shares in land rich companies); or
- an option or right to acquire the above assets.
Whilst the new measure targets transactions involving foreign residents, its application also affects transactions involving Australian residents unless the exceptions to the withholding obligations are satisfied.
Please review our Director and Accredited Property Specialist Maged Jebeile's full article published in the Australia Property Law Bulletin which contains a Practical Guide to the New Measure.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.