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Australian Treasury Consults On WHT Regime For Property

by Mary Swire, Tax-News.com, Hong Kong

06 November 2014


The Australian Treasury has launched a consultation on the design of a ten percent non-final withholding tax on the disposal by foreign residents of certain "taxable Australian property."

The scheme was originally contained in the Labor Government's 2013-14 Budget. In November 2013, the Coalition Administration announced that it would proceed with the measure.

Under the proposals, the payer in a transaction would be obliged to withhold ten percent of the proceeds payable in relation to the transaction where the payee is a foreign resident and the transaction involves an asset classed as "taxable Australian property." The amount withheld will be credited to the account of the foreign resident payee when calculating their final income tax position for the relevant income tax period.

The measure is intended to act as a collection mechanism to support the operation of the foreign resident capital gains tax (CGT) regime. It will apply regardless of whether the gains on disposal are subject to tax under the CGT regime or are subject to tax because the gains constitute ordinary income.

The changes will not apply to residential property transactions under AUD2.5m (USD2.2m) or to disposals by Australian residents.

The consultation closes on November 28, 2014, and the new tax will enter into force from July 1, 2016.

TAGS: capital gains tax (CGT) | tax | property tax | Australia | ministry of finance | tax rates | withholding tax | tax reform

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