Since the announcement of Australia’s new property withholding tax regime on 1 July, we have flagged the risks of this withholding tax to parties to family law matters.

The Australian Tax Office (ATO) has now taken a sensible step that lightens the burden on spouses. They released a class variation meaning that there is no withholding required under this regime on transfers covered by the legislative instrument. This follows the class variation for deceased estates, that we wrote about previously.

The variation applies to transfers completing from 26 October 2016. It applies to transfers that are covered by the Capital Gains Tax (CGT) roll-over in Subdivision 126-A, where the transferee holds a copy of the relevant court order or agreement.

Importantly, spouses and their advisors will still need to consider the new withholding tax regime if they are transferring real property (or interests in the same) where the CGT roll-over does not apply. In particular, this includes transfers where the receiving entity is a company or trustee.

Next steps

Should you have any questions please contact Murray Howlett from our Taxation Services division.