Minister for Housing and Assistant Treasurer Michael Sukkar has announced the Morrison government’s foreign resident capital gains tax (CGT) withholding laws – which came into effect on 1 July 2016 – have raised more than $1 billion.
The law requires buyers to withhold CGT on taxable Australian properties with a market value of more than $750,000 that they acquire from non-residents, with a 12.5 per cent non-final withholding applied to the transactions at settlement.
“Key government measures such as these have ensured foreign multinationals and wealthy foreign family groups can’t skip out on their Australian capital gains tax,” Mr Sukkar said.
The minister added that more than $500 million in CGT assessments have also been captured in compliance and engagement activity by the Tax Avoidance Taskforce over the last two years, which includes $290 million in cash collected as a result of a government crackdown on other asset sales by multinationals and foreign residents.
“Taken together, the decisive actions of this government have kept more than $1.3 billion in the country,” Mr Sukkar added.
“The message is clear to multinationals and foreign residents – you can’t avoid paying your CGT.
“The Tax Avoidance Taskforce we initiated and our foreign resident capital gains tax withholding laws, which both commenced 1 July 2016, have helped shut down opportunities for foreign entities who try to get their money out of the country before meeting their obligations.”
According to Mr Sukkar, the Tax Avoidance Taskforce is now intervening and engaging with non-resident vendors “in real time”, which he said ensures that tax is collected “on the spot” before the sales proceeds leave the country.
“In some instances, additional security has been sought over other assets to ensure foreign resident taxpayers meet their obligations,” he added.
The Taskforce’s compliance activity covers both direct property sales and sales of interests in companies and trusts whose assets are primarily property.
The types of property included in its remit are major infrastructure assets, agricultural assets, mining tenements, hotels and office towers.
“This is yet more proof that this government has put the laws in place and given the ATO the resources to make sure foreign entities doing business in Australia are meeting their tax obligations to the Australian community in full,” Mr Sukkar concluded.
CGT policies were front and centre of the federal election campaign in May, with the federal Labor opposition ultimately failing in its push to halve the CGT from 30 per cent to 15 per cent.