The Government released on Fri 31.10.2014, a Discussion Paper on its proposal to proceed with a 10% non-final withholding tax on the disposal, by foreign residents, of certain “taxable Australian property”.
The measure was originally contained in the Labor Government’s 2013-14 Budget and is to start from 1 July 2016. The measure is a collection mechanism to support the operation of the foreign resident capital gains tax regime.
Under the changes, the payer in a transaction will have an obligation to withhold 10% of the proceeds payable in relation to the transaction where (i) the payee is a foreign resident, and (ii) the transaction involves an asset that is “taxable Australian property”.
The measure will not apply to residential property transactions under $2.5m or to disposals by Australian residents.
The non-final withholding tax will apply regardless of whether the gains on disposal are subject to tax under the CGT regime or are subject to tax because the gains constitute ordinary income.
COMMENTS are due by 28 November 2014.
[LTN 231, 31/10/14]