As you undoubtedly know, there's a very strict tax regime in Australia designed to accumulate as much revenue as possible for the government to support a variety of public services. It's sometimes difficult to fathom how many individual tax laws there are, but new ones are emerging. For example, if you are a seller or buyer of certain properties, you should know that there is now a requirement to notify or account for capital gains tax, if appropriate. What does the law say?
The tax authorities are particularly interested in any due revenue for a property sale worth over $750,000. As an Australian resident involved in this type of transaction, you have to apply to the tax office prior to the settlement, in order to get a clearance certificate. While the turnaround time is relatively short, this is something that you should do whenever you put the property on the market, rather than waiting for a sale to be agreed.
The certificate confirms that the ATO is aware of the transaction and that the appropriate tax will be paid. Furthermore, the certificate is actually issued to the individual, rather than in relation to the property itself. Once you get the certificate, you can use it at any stage in the following twelve months and for any other properties that fall into this category. If you fail to get a certificate in time, then the buyer must take action instead. They are legally obliged to withhold 12.5% of the agreed price and to submit this money to the ATO instead.
This is just part of a push for new information by the ATO that came into effect last year. Your professional conveyancer will be required to help gather this information and provide the details. The authority wants to gather all your ID information and contact data, linked to the property details, the contract date, market value and status of the land. If a company was involved, the ATO will want its business number and date of incorporation, as well as the director's contact details.
For non-Australian residents, the buyer of the property must withhold the aforementioned percentage from the purchase price and submit it to the ATO after settlement. Once again, this is required to cover the statutory amount of capital gains tax.
If this tax is not due and payable by the individual then they can apply to the tax authorities for what is known as a "variation" certificate and when issued, this needs to be given to the buyer before settlement as well.
Unravelling the Process
It seems that the tax authority is looking very closely at property transactions in general. To make sure you comply, you should definitely engage a conveyancing service to help you wade through all the paperwork.Share