The Australian Government has imposed a 10% withholding tax on all purchases of real estate in Australia over AUD2m unless the vendor provides the purchaser with a clearance certificate from the Australian Tax Office which confirms they are Australian resident.
The new measure is aimed at improving the recovery of tax from non-residents who own Australian real estate assets. From 1 July all buyers of Australian real estate assets, whether they are residents or non-residents, should make sure their contracts are up to date and have clauses covering the new documentation requirements.
Significant penalties are imposed on purchasers who do not deduct the required withholding tax.
All property lawyers and agents should be up to speed with the new rules.