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Topics on CGT and GST for property buyers (5)

Written by Ideas Group | Feb 25, 2021 11:12:40 PM

 

Additional Exclusions and Seller Obligations in Foreign Resident CGT Withholding

Apart from the previously mentioned exemptions, Schedule 1's section 14-215(1) outlines more exclusions from foreign resident CGT withholding rules. These include:

  1. Transactions on approved stock exchanges.
  2. Transactions via broker-operated crossing systems.
  3. Transactions already subject to other withholding obligations (excluding GST withholding).
  4. Transactions considered security lending arrangements eligible for CGT roll-over relief under ITAA 1936 section 26BC.
  5. Transactions involving a foreign resident company under external administration.
  6. Transactions stemming from bankruptcy administration, compositions, schemes of arrangement, debt agreements, personal insolvency agreements, or similar scenarios under foreign law.

While these exclusions primarily relate to indirect Australian real property interests, they can also apply to Taxable Australian Real Property (TARP). Thus, buyers should assess whether an exclusion is applicable before withholding.

What information should sellers provide to buyers?

Under foreign resident CGT withholding rules, sellers aim to furnish buyers with information to:

  1. Avoid withholding at settlement (e.g., by providing a clearance certificate for TARP).
  2. Reduce the withholding rate (e.g., by providing a valid variation notice).

For further inquiries, reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or schedule an appointment via our live calendar.
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