On Thursday, 15.6.17, the Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Bill 2017 passed by the House of Reps, and moved to the Senate, where it was also passed on the same day.

The now passed Act will amend the relevant withholding provisions in Division 14 of Schedule 1 to the Taxation Administration Act 1953, modify the foreign resident capital gains withholding payments regime, In the following way:

  1. reduce the withholding threshold from $2 million to $750,000; and
  2. increase the withholding rate from 10% to 12.5%.
  3. make these changes with effect from 1 July 2017.

This was a measure announced in the last Federal Budget on 9 May 2017.

The $2 million threshold is the level at which vendors cannot ‘self-assess’ their resident status, and must obtain a certificate from the ATO, before the purchaser is freed of any obligation to withhold the relevant 10% (now 12.5%) of the purchase price and remit it to the ATO (Commissioner).

The Senate Economics Legislation Committee tabled its report on the Bill, 1 day earlier. Submissions on the Bill expressed concerns regarding the change to the threshold from $2 million to $750,000 and the proposed date of effect of the measure, namely: 1 July 2017. It was considered that the $750,000 threshold was too low. While noting the concerns, the Committee recommended the Bill be passed.

[APH – Bills Digest; Bill; EM; FJM; LTN 111, 15.6.17]