Are you buying property in WA > $750,000?
Make sure you don’t get left owing the ATO 12.5% of the purchase price.
From 1 July 2017 SELLERS need to provide the BUYER with an ATO Clearance Certificate as evidence that they are an Australian resident for taxation purposes. If they don’t the BUYER needs to withhold 12.5% and remit it to the ATO.
BEWARE – the standard contract used in WA has not been amended to reflect this change. So whilst the new legislation may require you to withhold 12.5%, the contract may require you to pay 100% of the contract price to the seller.
This will not normally be a problem IF the seller provides your settlement agent with a Clearance Certificate or (if they fail to provide a Certificate) agrees to 12.5% being withheld. However, it will mean that you may not be able to claim penalty interest (potentially worth thousands of dollars) if the seller experiences difficulties or delays in obtaining the Clearance Certificate.
REIWA & the Law Society have drafted an Annexure which effectively protects the buyer’s interests and ensures they are able to meet their obligations to the ATO. Before you sign a contact ensure that a FRW (Foreign Resident Withholding) Annexure is added to the contract. If the contract has already been signed consider asking the real estate agent to vary the contract to include it.
If you’ve got hours to waste then visit the ATO website to learn more. Better still save yourself time and money and call the settlement experts, Marcus & Jackie at Personalised Settlements on 08 9370 3315.