Another ridiculous tax policy… supported by every side

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When there is change in government you hope they can dump all the stupid ideas of the previous government. But with the new government still needing to find savings stupid ideas seem not so stupid.

In the May 2013 Budget the Labor (one day they might learn how to spell their party’s name) stead they would introduce a withholding tax arrangement where non-residents sell certain properties and make a capital gain from 1 July 2016. So if you buy, yes buy, not sell, a commercial property or a residential premise valued at greater than $2.5 million, you need to establish if the seller is a non resident for tax. For if they are you only give them 90% of the price and send 10% to the Commissioner.

About once a month the AAT is called on to decide if a taxpayer is a resident or not. And now that job falls on property purchasers. Ridiculous.

Of course everyone says that you just put it in the contract. But this won’t work. The reason the law is being introduced is that these non residents take the money and run without paying tax. So now they just claim in the contract they are residents and tax the money and run.

And then the Commissioner come to the buyer and says where is the cash… This will only just penalise buyers…

Well done policy wonks… one day you might actually be involved in a real commercial transaction.

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
This entry was posted in Income Tax, Tax Policy and tagged , . Bookmark the permalink.

One Response to Another ridiculous tax policy… supported by every side

  1. Pingback: A withholding tax nightmare starts in 2016… | Tax Rambling

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