Need to Know: New Foreign Resident CGT Withholding Tax

What is the change?

On Friday July 1 2016, the rules for all transacting dwellings and commercial property worth over $2 million will change. A 10% non-final Capital Gains Withholding tax will be incurred on these transactions at settlement. This will affect all transactions and including those by Australian Residents

The new legislation imposes an obligation on purchasers to withhold 10% of the purchase price and pay it to the ATO where a seller enters a contract after 1 July 2016.

Never be caught by unexpected changes in Australian property law.

How will the Stamp Duty Increase Affect You?

From the 1 July 2016, there will be an increase in stamp duty for foreign buyers from 3% to 7% in Victoria.

There will also be an increase in the land tax surcharge for absentee landlords from 0.5% to 1.5% for the 2016/2017 tax period.

Who is a foreign person?

A foreign person is anyone except

  • An Australian citizen
  • An Australian permanent resident
  • A New Zealand citizen with a temporary Australian Visa

When will the new stamp duty apply?

The new rate will apply to contracts entered into or after 1 July 2016.