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23 December 2016

News Flash: Variation to foreign residence CGT withholding tax

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On 15 July 2016, I wrote a blog on the then new 10% CGT withholding tax which came into effect on 1 July 2016 by virtue of the Tax Superannuation Laws Amendment (2015) Measures (No. 6) Act 2016.

The Act intended to assist the Australian Taxation Office (ATO) in the collection of foreign investors’ Australian tax liabilities arising from the sale of real property with the market value of $2 million dollars ($2,000,000.00) or more. The tax regime in the family law context had no exemption for transfers of property following marriage or relationship breakdown.

That blog is now out of date as a result of the ATO announcing a variation to the scheme to be applied to family law cases where the transferee acquires ownership of an asset as a result of a court order, agreement or award relating to the breakdown of the relationship between spouses or de facto partners.

In the family law context, as a result of the changes set out in the Commissioner’s PAYG Withholding variations for foreign resident capital gains withholding payments – marriage or relationship breakdown (which commenced on 26 October 2016), the amount to be paid to the Commissioner has been reduced to nil and the requirement for the transferee to make an application for a variation and for the transferee to withhold 10% of the purchase price has been removed.

For those who would like to read further about this see:

  • the Legislative Variation Instrument (Australian Government, Australian Taxation Office, Variation 51 Taxation Administration Act 1953;) and
  • explanatory discussion (Australian Government, Australian Taxation Office, Variation 51 Taxation Administration Act 1953).

It is important to obtain expert accounting advice as to taxation matters and legal advice about the terms of property settlement prior to entering into an agreement.

If you would like to obtain advice about tax issues and your family law matter please make an appointment with one of our solicitors.

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