Australian taxation obligations and foreign investment in Australia
For people who want to invest in Australia, the following provides general information and links to websites which may be of further assistance.
A general overview
Investing and owning real property in Australia, along within formation on associated taxation obligations,can be found on the Australian Taxation Office (ATO) website.
To understand the tax obligations associated with investments in Australia, the first step is to determine your residency status. You will need to consider whether you are a Foreign, Temporary or Permanent resident for Australian taxation purposes.
Determination of residency status applies to all Individuals, Partnerships, Companies and Trusts. Knowing what your residency status is will determine what taxation treatment is applicable.
Information on how to work out your residency status and requirements is available via the following links:
All Australian residents and entities (Partnerships,Companies,and Trusts) must meet their Australian tax obligations. Tax obligations are based on world-wide income. Non-residents also have Australian tax obligations; their obligation is based on all income which has its source in Australia. This is known as Australian Sourced Income.
More information for Individuals and Companies can be found on the following links:
Capital Gains Tax
In Australia, Capital Gains Tax (CGT) may be payable on the sale of a property and/or land. If you’re a foreign or temporary resident and you sell property and /or land you may have to pay CGT.
More information on CGT can be found at Capital Gains Tax.
Foreign Resident Withholding Tax on Capital Gains
Broadly, where a foreign resident disposes of certain taxable Australian property, the purchaser will be required to withhold and pay 10% of the proceeds from the sale to the ATO.
While the withholding regime will protect the integrity of the foreign resident CGT regime, it will equally apply where the disposal of certain taxable Australian property assets by a foreign resident is likely to generate gains on revenue account and,as a result,be taxable as ordinary income,rather than as a capital gain.
You can learn more at Foreign resident capital gains withholding payments.
Goods and Services Tax (GST)
The purchase, sale, lease or development of a property in Australia may attract GST.
Where people are actually carrying on an enterprise when making property transactions (buy,sell,lease or develop) and turnover is more than the GSTregistration threshold, they are required to register for GST.
The rules vary around new and existing residential, commercial and agricultural land.
More information can be found at GST and property.
Deductions associated with residential rental properties
If you invest in an investment property or rent out your current property, you will need to keep records to workout what expenses you can claim as deductions, and declare all your rental related in come in your tax return.
More information can be found at Residential rental properties.
Double Tax Agreement (DTA)
Australia has DTAs with more than 40 countries. They prevent double taxation and fiscal evasion.
The DTA signed between Australia and the People’s Republic of China states that the right to tax income and gains from property and/or land is assigned to the country where the property and/or land is located. Therefore income or gains derived from property and / or land situated in Australia is taxed in Australia.
For more information on DTAs, plus a full list of Australia’s other tax agreements, visit our website.
State and Territory Taxes
Please Note:The content provided above is intended to offer a summary and general overview on matters of interest.Information above does not constitute the provision of legal or taxation advice. It is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content provided here or via the links.
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