The website pages for Foreign resident capital gains withholding (www.ato.gov.au/FRCGW) were updated last week to provide further guidance on:
- how to fill in a clearance certificate for a trust – it is the entity that has legal title to the asset, generally the trustee needs to apply for a clearance certificate in its own capacity,
- what to do if the client has changed their name – proof of name change may be provided, for example a marriage certificate issued from an Australian state or territory registry,
- what a head company consolidated group clearance certificate will contain but subsidiaries can also apply in their own right,
- deceased estates,
- mortgagee in possession situations.
Other key messages from the ATO:
- Conveyancers (who are not legal practitioners or registered tax agents) may give a PDF version of the Clearance certificate or Vendor variation form to their clients to be completed, which then need to be entered into the online version.
- We need all Conveyancers and other legal practitioners who provide information to the ATO on behalf of their client to use the online version of the forms, retaining (not submitting) the signed PDF version.
- Where possible the TFN of both the purchaser and vendor are to be provided to ensure the forms process as fast as possible. Alternatively the date of birth of the vendor assists identification and allows confirmation of payment to be issued quickly.
- All vendors of the asset need to obtain a Clearance certificate to avoid withholding, for example both the husband and the wife if the property is in joint names.
- The ATO has adopted an administrative arrangement to allow a purchaser to rely on a Clearance certificate where the name matches the certificate of title and the date the certificate is given to the purchaser falls within the time period for which the certificate is valid.
- Attachments are not required, but may be useful for a Clearance certificate where a taxpayer’s residency status has changed, or for a Variation to support the application, or for a Purchaser payment notification where there is more than one asset to which the form applies.
Over coming months we will be announcing outcomes of our consultation considering where we can use legislative instruments to reduce the administrative burden in the following scenarios:
- Deceased estates – to use the mechanism of a class variation to effectively remove the withholding obligation in certain situations where capital gains rollover relief applies. However the transactions where the legal personal representative sells or disposes of property (not to a beneficiary) will still be subject to FRCGW.
- Relationship breakdown – transactions involving transfers of assets under Family Court orders (CGT rollover relief applies).
- Vendors that are not-for-profit entities (to the extent they can be readily and reliably identified as being such by purchasers).