Capital gains withholding payments - impacts on foreign and Australian residents
Previously, all buyers of real property over $2M were required to withhold a percentage of the purchase price (unless the seller provides a clearance certificate from the ATO) and pay it to the ATO to allow the ATO to better collect payment of Capital Gains Tax from foreign owners.
Effective 1st July 2017 the threshold of $2M has been reduced to $750K to widen the ATO's pool of CGT collection. The percentage of funds required to be withheld has also increased from 10% to 12.5%.
This means that more Contracts fall under the new regime, with all contracts over $750K requiring an ATO Clearance Certificate for the Seller to receive the full sale price at settlement.
If you are a buyer you need to ensure you receive the sellers ATO Clearance Certificate prior to settlement otherwise you could find yourself liable for the sellers CGT liability!
For more information - https://www.ato.gov.au/General/Capital-gains-tax/In-detail/Calculating-a-capital-gain-or-loss/Capital-gains-withholding--Impacts-on-foreign-and-Australian-residents/