The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
2 WEEKS UNTIL OUR UNMISSABLE FLAGSHIP CONFERENCE MORE THAN 550 ALREADY ATTENDING
2 WEEKS UNTIL OUR FLAGSHIP CONFERENCE 550+ ALREADY ATTENDING
REGISTER NOWDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
print
Print
OtherStaff WriterWed 18 May 16

Legislative Changes Could Delay Property Settlements

i

The introduction of new legislative changes on property sales over $2 million will create a new compliance burden and could delay property settlements, according to national accounting and advisory firm William Buck.

On the 1st of July 2016 the new legislation will come into effect under The Tax and Superannuation Laws Amendment Bill 2015. It introduces a new 10 per cent withholding obligation on the purchasers of properties over $2 million where the vendor is a foreign resident for tax purposes. Sellers are also now required to obtain a clearance certificate to prove they are an Australian resident for tax purposes.

According to data from APM Research and the Australian Bureau of Statistics in the 2016 FYI (up to 31 April) there were 12,072 house and apartment sales in Australia over $2 million.

Manda Trautwein, Director at William Buck comments, “The legislative changes will put Australian and foreign residents on a level playing field, but will have their challenges. The tax compliance burden for resident taxpayers will significantly increase and conveyancers will need to ensure their clients are abiding by the new laws to limit property settlement delays.

“The Federal government is expected to significantly benefit from the new changes as there should be less tax revenue leakage.

Manda Trautwein, director, William Buck[/caption]“From a buyer’s perspective they now have an obligation to withhold 10 per cent of the property price to ensure the purchaser is compliant with the new regulations, otherwise they could be liable to pay a penalty which is up to the full 10 per cent of the purchase price plus interest.

“From a seller’s perspective, they could have less funds available which might otherwise have been available to discharge the mortgage on the property and/or fund a new property purchase. They could end up with only 90 per cent of the proceeds on settlement unless they are able to obtain a clearance certificate from the tax office. If there are data irregularities, delays of between 14 to 28 days are expected to obtain a clearance certificate.

“The legislative changes were introduced to reduce difficulties that can be associated with collecting tax on gains resulting from the sale of property assets from foreign resident taxpayers. Some of these tax payers have a limited connection to the Australian tax system and may be in a position to transfer proceeds offshore prior to compliance action being taken. Voluntary compliance by foreign residents in this regard is said to be extremely low.”

The ATO is yet to release forms for the following: clearance certificate application for Australian residents; variation application for foreign residents and other parties; purchaser payment notification.

OtherOfficeAustraliaFinancePolicyPolicy
AUTHOR
Staff Writer
"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
More articles by this author
ADVERTISEMENT
TOP STORIES
The Port of Brisbane has released its Vision 2060 which details the need for inland rail connectivity
Infrastructure

Brisbane Port’s $15bn Future Faces One Big Obstacle

Renee McKeown
5 Min
Freecity Rouse Hill triple towers 2 Tempus Street
Exclusive

Freecity Takes Covers Off $330m Triple Towers in Sydney’s North-West

Leon Della Bosca
5 Min
Parallel Workshops Stockdale Housing PBSA project
Exclusive

Suburban Success Story Turns PBSA Thinking on its Head

Leon Della Bosca
7 Min
Exclusive

Interstate Developers Find Lots to Love in ‘Progressive, Affordable’ SA

Taryn Paris
5 Min
Bates Smart Richmond Sportslink HERO
Exclusive

BtR Focus Drives Bates Smart’s Richmond Sportslink Concept

Leon Della Bosca
6 Min
View All >
Stockland's Triniti HERO
Build-to-Rent

Stockland $400m North Ryde BtR Approved on Appeal

Leon Della Bosca
Residential

Home Affordability Gap Widens Across Asia-Pacific

Lindsay Saunders
The Port of Brisbane has released its Vision 2060 which details the need for inland rail connectivity
Infrastructure

Brisbane Port’s $15bn Future Faces One Big Obstacle

Renee McKeown
Global ports shift up to 30 per cent of containers by rail—Brisbane moves less than 2 per cent. Here’s why that’s a prob…
LATEST
Stockland's Triniti HERO
Build-to-Rent

Stockland $400m North Ryde BtR Approved on Appeal

Leon Della Bosca
3 Min
Residential

Home Affordability Gap Widens Across Asia-Pacific

Lindsay Saunders
3 Min
The Port of Brisbane has released its Vision 2060 which details the need for inland rail connectivity
Infrastructure

Brisbane Port’s $15bn Future Faces One Big Obstacle

Renee McKeown
5 Min
Logan Wastewater Funding hero
Infrastructure

Flush of Funding to Deliver 20,000 New SEQ Homes

Phil Bartsch
3 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/tax-legislative-changes-could-delay-property-settlements