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The ATO is getting smarter…this change affects all contracts dated after 1st July 2017 with a $750k Purchase Price and over.
The ATO introduced in July 2016 a 10% non-final withholding tax which takes effect on any contracts dated from 1st July 2016 with a purchase price over $2 million. But now as of 1st July 2017, it’s been amended to purchase prices $750k and over with the amount deducted changing to 12.5%.
The ATO is using this opportunity to not only verify if the seller is a foreign resident, but in the case of Australian Citizens, they are chasing up local hidden black market property sellers, and people who haven’t lodged a tax return in 2 or more years. Recently an older person in Sydney sold a $2m plus home but had not lodged a tax return in decades, so the ATO used this against her and didn’t issue the clearance certificate until they obtained from her what was required, causing her to pay penalties for the settlement delay. So, what does this mean for you as a seller?
In the act it brings a third party into getting a fine (ie Real Estate Agent) if they fail to advise the Buyer of their obligations and assist in letting this get passed the keeper. Fine is $45k for an individual and $225k for a company. So if you are selling a property over the amount of $750k, advise your seller if they haven’t done a tax return in 2 or more years… they better start looking into that as soon as possible. More obligations are continuing to be placed upon settlement agents by government departments. It is important that you use a settlement agent that keeps you up to date with what is happening and understands the requirements for you so contact us prior to even entering into a contract to find out things that could assist you before you do so.