The Australian Government will introduce a withholding tax obligation to ensure that foreign investors comply with Australia’s tax laws.
The Government has released exposure draft legislation that provides for the application of a ten percent non-final withholding obligation on the disposal by foreign residents of taxable Australian property. If passed, the rule would apply from July 1, 2016.
Where the seller of certain Australian assets is a foreign resident, the buyer would be required to pay ten percent of the price to the Australian Taxation Office (ATO) as withholding tax. The obligation to withhold from the price payable to foreign residents would not apply to residential property valued under AUD2.5m (USD1.8m).
Small Business Minister and Acting Treasurer Bruce Billson said: “This change supports the operation of Australia’s capital gains tax. It will address difficulties associated with collecting tax from foreign resident taxpayers… This measure puts Australian residents and foreign residents on a level playing field when it comes to meeting their tax obligations.”
The Government has invited submissions on the exposure draft legislation. The closing date for submissions is August 7.
– 2.5m AUD threshold is very generous. But at least we have something to talk about when collecting those tax from those overseas investors who never set a foot in this country.
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