August Newsletter 2017

Land Tax Surcharge

Last year the NSW state government changed the land tax and stamp duty rules to introduce surcharges for “foreign persons”. Land tax is levied based on land owned at 31st December. If you are a foreign person who owns residential land in NSW, the changes mean that you must pay a land tax surcharge of 0.75% which is levied in your annual land tax assessment. An individual, who is not an Australian citizen, is a foreign person if they are not ordinarily resident in Australia. The “foreign person” definition has a wide net and may also catch certain trusts and companies. The Office of State Revenue have recently commenced advising discretionary trust land holders that unless they amend their trust deeds to exclude foreign persons as potential beneficiaries, they will be issued with a foreign resident surcharge assessment. The OSR have issued a Revenue Ruling reflecting this (Revenue Ruling G 010).

Australian Property Sales – Foreign Resident CGT Withholding

The Government has announced changes to the foreign resident capital gains withholding rate and threshold. For contracts entered into on or after 1 July 2017, Australian resident vendors selling Australian properties for $750,000 and above (previously $2 million) will need to obtain a Foreign Resident Capital Gains Withholding Clearance certificate from the Australian Taxation Office. A purchaser who does not receive a clearance certificate from the vendor is required to withhold 12.5% (previously 10%) from the purchase price and pay that amount to the ATO.

Superannuation – Retirement

With the introduction of the term “retirement phase” pensions post 1 July 2017, it’s now more important than ever to consider whether a superfund member can start an accounts-based pension (ABP) or convert their existing transition to retirement income stream (TRIS) into an ABP. After 1 July 2017, only retirement phase pensions e.g. ABPs , are able to claim the pension exemption on investment income on assets used to support the pension. On the other hand, TRIS are not classed as retirement phase pensions and therefore cannot claim the pension exemption until they enter retirement phase once a condition of release is met and trustee notified (except for attaining age 65). The Australian Prudential Regulation Authority (APRA) has now confirmed that a member that reaches 60 and has two or more genuine employment arrangements will meet the definition of retirement if they cease one of their jobs.

If we can assist you regarding any of the above issues, please do not hesitate to contact our office.