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From 1 July 2016, property transactions with a market value of $2 million or more have become much more complex. Both vendors and sellers should understand the rules before entering into a property contract.

Email ImageAlthough called “Foreign Resident Capital Gains Withholding”, the new law’s application is much broader than the name implies. Where the withholding tax is applicable, 10% of the property’s market value will be payable to the ATO. Care is therefore needed surrounding these rules in relation to sales, purchases or other transfers of property. If not applied correctly Sellers, Purchasers and other parties related to a transfer may end up out-of-pocket.

Over the past few weeks, Murray Howlett a partner in our Tax division has spoken extensively on the new withholding tax rules. He and our tax team have now also advised a number of clients through different transaction scenarios.

As a result we have developed a broad user guide which addresses direct Australian property transfers valued at $2 million or more. The two-page guide also includes links to the relevant ATO forms.

Download Withholding Tax Guide (PDF)

Next steps

Should you have any questions related to the guide or the transaction process, please contact Murray Howlett from our Taxation Services division.