Every couple of years a new piece of paperwork or compliance is added to the sales process to try and drive a tax, compliance or agenda into the market.
A sale or rental transaction is an easy target, but it can clog up the process.
Over the years we have seen body corporate disclosures, smoke alarms and safely switch checks, pool fence compliance and sustainability declarations just to name a few.
Some stay, some get the flick from the next government. The new one that is getting pushed through is a lowering of the ATO’s Clearance Certificate that is required from all owners when selling a property above $2 million. The document discloses whether the owner is a foreign resident.
From July 1 this is reduced to $750,000.
Now as with all of these requirements, the intention is generally good. In this case it’s so people who are residing overseas pay the appropriate tax when they sell their property in Australia.
The reality is any additional paperwork takes time.
Time around settlement or affecting funds being paid on time can play a pivotal role in negotiations and people’s lives.
Also it adds a level of liability to whoever fills in the form and in this age of litigation who wants another litigious landmine.
When it was rolled out late last year many in the market let it slide because it only applied to sales of more than $2 million. But at the now reduced price of $750,000 there will be many transactions requiring this paperwork.
This means in the absence of a clearance certificate the purchaser or their solicitor, must withhold 12.5 per cent of the purchase price and forward that to the ATO.
There will be some angry owners if they are missing out on 12.5 per cent of their sale price because they didn’t do or even know about these certificates.
Once understood I imagine it will just slip into the process, but with the industry caught a bit off guard agents need to get up skilled quickly. The Real Estate Institute of Queensland, and I imagine many industry groups, are pushing as much information as possible out to agents as quickly as they can, these changes come into affect on 1st July.
The REIQ has sessions on Monday June 26.
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