An Australian Taxation Office (ATO) crackdown on foreign buyers could see property settlements delayed... Post-election interest rate rise likely...
ATO crackdown could increase settlement times
An Australian Taxation Office (ATO) crackdown on foreign buyers could see property settlements delayed.
As of 1 July, new legislation will come into effect under The Tax and Superannuation Laws Amendment Bill 2015 which require buyers of residential properties worth more than $2 million to withhold 10% of the purchase price when the vendor is a foreign resident for tax purposes.
Sellers will also now required to obtain a clearance certificate to prove they are an Australian resident for tax purposes.
Manda Trautwein, director at accountancy firm William Buck, is supportive of the changes, but said they will likely delay the process for those buying and selling luxury properties. “The legislative changes will put Australian and foreign residents on a level playing field, but will have their challenges. The tax compliance burden for resident taxpayers will significantly increase and conveyancers will need to ensure their clients are abiding by the new laws to limit property settlement delays,” Trautwein said.
“The Federal government is expected to significantly benefit from the new changes as there should be less tax revenue leakage,” she said.
Post-election interest rate rise likely
Australian borrowers have been warned of impending interest rate hikes following the conclusion of the federal election campaign.
While the latest board meeting of the Reserve Bank saw the cash rate drop and predictions have mounted of further falls in coming months, the head of a major mortgage broking network believes borrowers are likely to see their interest rates rise rather than fall.
“The July 2 federal election has delayed moves by the banks to increase rates independently of the RBA,” 1300HomeLoan managing director John Kolenda said. “The banks want to lift rates in response to rising funding costs and the additional costs they face for the extra compliance and regulatory increase on reserves they will have to have in place by the end of June this year.”
Kolenda said the recent attention from both sides of politics and the federal Opposition pledge to hold a Royal Commission into Australia’s banking system has also tied the banks hands on rates until after the election.
“While the RBA has room to cut its cash rate further due to the sluggish economy and subdued consumer confidence, any future reduction is likely to be negated,” he said.
An Australian Taxation Office (ATO) crackdown on foreign buyers could see property settlements delayed.
As of 1 July, new legislation will come into effect under The Tax and Superannuation Laws Amendment Bill 2015 which require buyers of residential properties worth more than $2 million to withhold 10% of the purchase price when the vendor is a foreign resident for tax purposes.
Sellers will also now required to obtain a clearance certificate to prove they are an Australian resident for tax purposes.
Manda Trautwein, director at accountancy firm William Buck, is supportive of the changes, but said they will likely delay the process for those buying and selling luxury properties. “The legislative changes will put Australian and foreign residents on a level playing field, but will have their challenges. The tax compliance burden for resident taxpayers will significantly increase and conveyancers will need to ensure their clients are abiding by the new laws to limit property settlement delays,” Trautwein said.
“The Federal government is expected to significantly benefit from the new changes as there should be less tax revenue leakage,” she said.
Post-election interest rate rise likely
Australian borrowers have been warned of impending interest rate hikes following the conclusion of the federal election campaign.
While the latest board meeting of the Reserve Bank saw the cash rate drop and predictions have mounted of further falls in coming months, the head of a major mortgage broking network believes borrowers are likely to see their interest rates rise rather than fall.
“The July 2 federal election has delayed moves by the banks to increase rates independently of the RBA,” 1300HomeLoan managing director John Kolenda said. “The banks want to lift rates in response to rising funding costs and the additional costs they face for the extra compliance and regulatory increase on reserves they will have to have in place by the end of June this year.”
Kolenda said the recent attention from both sides of politics and the federal Opposition pledge to hold a Royal Commission into Australia’s banking system has also tied the banks hands on rates until after the election.
“While the RBA has room to cut its cash rate further due to the sluggish economy and subdued consumer confidence, any future reduction is likely to be negated,” he said.
