From 1st July 2018, individuals and entities who sell properties for more than $750,000 will require an ATO clearance certificate proving their residency otherwise an amount of 12.5% of the sale price will be withheld.
Whether you are an individual or real estate agent, AMD can happily assist you with this certificate, as in many cases the concept can prove to be complex.
Asset types this ruling affects include:
• real property – taxable Australian real property with a market value of $750,000
• vacant land, buildings, residential and commercial property
• mining, quarrying or prospecting rights where the material is situated in Australia
• a lease over real property in Australia, if a lease premium has been paid for the grant of the lease
• indirect Australian real property interests in Australian entities (that is, a membership interest of 10% or more in an entity whose underlying value is principally derived from Australian real property) – this includes shares in a company that owns land or a building erected on that land, where the ownership of the shares gives a right to occupy that land or building (that is, a company title interest in real property)
In many cases, the market value of a property will be the purchase price. Where the purchase price has been negotiated between the vendor and the purchaser, acting at arm’s length, the ATO will accept the purchase price as a proxy for market value.
However, there could be circumstances where the market value is different to the stated purchase price (for example, where the vendor and purchaser are related parties and did not deal with each other at arm’s length). In such cases, the ATO will not accept the purchase price as a proxy for market value.
For more information, contact your AMD Representative. Alternatively, speak to one of our specialists – Steven Florance or Shane Kaurin.