CANBERRA: In February 2016 the Australian Government introduced a 10% non-final withholding tax when foreign tax residents dispose of certain taxable Australian property, and it applies to contracts entered into on or after 1 July 2016.
Entities regularly involved in the sale and purchase of relevant assets need to consider how the regime will apply to their future transactions as purchasers and vendors. The new rules aim to assist in the collection of tax from foreign residents and make sure they meet their tax obligations in Australia. The purchaser is required to withhold 10% of the purchase price, report and pay the amount to the Australian Taxation Office (ATO) on or before settlement. If an amount has been withheld, the vendor will be required to file an annual Australian income tax return in order to recover the 10%.
