On 6 November 2013 the Government announced that it would proceed with a 10 per cent 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.
Under the measure, the payer in a transaction will have an obligation to withhold 10 per cent 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 $2.5 million.
The discussion paper describes the proposed design for implementing the non-final withholding tax regime, including options for reducing the compliance burden and red-tape associated with the withholding obligation.
Comments are invited about the consultation issues outlined in the discussion paper. Input received from interested parties will assist in developing the legislation to implement the regime.