Global

Details

  • Service: Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/30/2013

Australia - Withholding on real property disposals by foreign residents 

July 30: Australia’s government has proposed a non-final withholding tax when a foreign resident disposes of Australian real property interests, whether or not the interest is held on revenue or capital account.

Under the proposal (which would be effective 1 July 2016), the purchaser would be required to withhold and remit 10% of the proceeds from the sale.


The withholding regime would not apply to residential property transactions valued under AUS $2.5 million.

Background

Currently, when a foreign resident disposes of an interest in Australian real property, a gain from the disposal is subject to tax in Australia on an assessment basis.


In recent cases, the Australian Taxation Office (ATO) has been willing to seek orders from the Federal Court freezing the Australian assets of a foreign entity if a “debt” owed to the ATO is believed to be unsatisfied because the assets of the debtor (or another person) will either be removed from Australia or disposed of, dealt with, or diminished in value. However, as the Federal Court has described it, this collection mechanism is “draconian.”

Collection mechanism

The proposal focuses on the collection mechanism—as opposed to whether or not a particular gain would be assessed. That is, once an assessment is made and a tax liability has been determined under the tax law, the new withholding system would apply to collect the tax.


Read a July 2013 report prepared by the KPMG member firm in Australia: Australian real property interests: foreign resident withholding regime proposed




©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

 

Share this

Share this

Subscribe

Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)


Already a Subscriber? Login


Not a member? Subscribe now