Determining the market value of a property is important because certain rules regarding foreign resident Capital Gains Tax (CGT) withholding don't apply if the property's market value is below certain thresholds ($750,000 or $2 million for contracts between July 1, 2016, and June 30, 2017).
To figure out the market value, consider:
GST: If the buyer is GST-registered, the property's value is reduced by any input tax credits they would have gotten if it was solely for business. For non-GST-registered buyers, the value is generally the price including GST.
Margin Scheme: Buyers using this scheme can't get input tax credits, even if they're GST-registered. So, the property's value under this scheme is usually the price including GST.
Settlement Adjustments: Costs like council rates don't change the property's market value.
Related Party Dealings: If the buyer and seller aren't dealing at arm's length, an independent valuation might be needed.
Multiple Buyers and Sellers: The property's total value (not individual shares) is compared to the $750,000 or $2 million threshold.
If you need more info, reach out to Tax Ideas Accountants & Advisers at +61 2 8318 1545 or book an appointment using our live calendar.