ATO Crackdown on foreign real estate investment
December 14, 2016
Written by Janet Hryb
The federal government is strengthening the foreign investment framework, making the most significant changes to foreign investment in Australian property in the last 40 years.
There are two parts to this crackdown – one to capture the potential seller and one to capture the potential buyer. From 1 July 2016 all registered proprietors on title whether or not they are foreign who are selling real estate with a market value of $2 million or more will need to apply for a clearance certificate from the Australian Taxation Office (ATO) to ensure amounts are not withheld from the sale proceeds. Where a valid clearance certificate is not provided by settlement (ie the seller is deemed to be a foreign investor), the purchaser is required to withhold 10% of the purchase price and pay this to the ATO at settlement. The clearance certificate form is available
online on the ATO website.
For buyers, if you do not meet the below criteria, you are deemed to be a foreigner and you need to apply to the Foreign Investment Review Board for approval. This includes:
- An Australian citizen (regardless of whether they are ordinarily resident in Australia or not);
- The holder of an Australian permanent visa; or
- Foreign persons purchasing property as joint tenants with their Australian citizen spouse, New Zealand citizen spouse, or Australian permanent resident spouse.
(This exemption does not include purchasing property as tenants in common) From 1st December 2015 application fees now apply for foreign buyers, minimum fee is $5,000 for properties valued at 1 million or less. Our mortgage broker Janet Hyrb can assist with any further queries regarding transfer of ownership. Speak to Janet Hryb on 041 9 766 088 or send her an email firstname.lastname@example.org.