There are many taxes involved in the process of buying and selling property in NSW, including GST, Capital Gains Tax, Land Tax, and Transfer (Stamp) Duty. A relatively new addition to Conveyancing transactions is the Foreign Resident Capital Gains Withholding, which now affects all property transactions in Australia.
You might wonder why it affects you even if you are an Australian resident. If you’re a vendor and don’t provide the required clearance certificate before settlement, the purchaser must withhold 15% of the purchase price.
So, do you have to pay this? If you are an Australian resident for tax purposes, you can apply for a clearance certificate . Note that the residency test for tax purposes is different from those for immigration purposes.
Generally, an individual is considered an Australian resident for tax purposes if they:
- Have always lived in Australia, or came to Australia and live here permanently.
- Have been in Australia continuously for 6 months or more, working in one job and living at the same place.
- Have been in Australia for more than 6 months of the year, unless their usual home is overseas and they don’t intend to live in Australia.
- Go overseas temporarily and don’t set up a permanent home in another country.
- Are an overseas student who came to Australia to study and are enrolled in a course lasting more than 6 months.
Purchasers who fail to withhold the tax at settlement when required may be subject to penalties.
If you have questions, visit the or call our office at (02) 6332 6133 to discuss how this might affect you.
