New laws force foreign resident compliance with tax liabilities


1. Why are these new laws being introduced?
1. 为何有新法律出台?

The new laws are intended to assist in the collection of foreign resident CGT liabilities in relation to both direct and indirect Australian real property interests. Historically voluntary compliance has been very low, and enforcement procedures have been costly and difficult to undertake. The new laws (quite cleverly) push responsibility for implementation and enforcement onto purchasers, making purchasers responsible for withholding the non-final CGT amount from the purchase price (ie 10%) and paying it directly to the Australian Taxation Office (ATO). This will force foreign resident vendors to comply with their CGT liabilities, and will prompt them to either take preventative steps to reduce or avoid the 10% withholding tax before it occurs, or to seek an adjustment or credit when they lodge their income tax return (eg similar to pay as you go withholding from salary and wages in Australia).


2. How does it work?
2. 如何操作?

The purchaser of a relevant CGT asset must withhold 10% of the market value of the asset from the purchase price and pay that amount to the ATO on or before the day that the asset is acquired (ie the day of settlement), unless the purchaser is in receipt of a clearance certificate, a notice of variation, or a vendor declaration.


What types of transactions will be affected?

The new regime will apply to:


(a) direct transactions relating to taxable Australian real property (eg land, buildings, lease premiums, mining, quarrying and prospecting rights), including options or rights to acquire taxable real property interests; and

(b) indirect transactions relating to interests in Australian entities where the majority assets of the relevant entity consist of the kinds of real property interests identified in part (a) above.

3. What types of transactions are excluded from the regime?
3. 哪些交易不包含制度之内?

Some examples of acquisitions not caught by the new regime are:

(a) real property transactions where the “market value”[i] is below AUD 2 million;

(b) transactions listed on an approved stock exchange; and

(c) acquisitions where the foreign resident vendor is under external administration or in bankruptcy.

4. What happens if the purchaser doesn’t withhold the tax?
4. 买家不缴税会怎样?

If a purchaser fails to withhold the correct amount and pay it to the ATO on completion, then the penalty payable by the purchaser will be equivalent to the amount that it should have withheld had it acted appropriately (eg 10% of the purchase price).

5. What does the vendor need to do?
5. 卖家需要做什么?

If the vendor does not agree that a standard withholding amount of 10% is appropriate, it will need to either:


  • obtain a clearance certificate (eg for Australian resident vendors);获得官方声明(比如,卖家是澳大利亚自主居民就不用交税)
  • give a declaration to the purchaser in accordance with the statutory requirements. However, vendors should be aware that there are significant penalties for giving false declarations; or给买家法定要求的声明,然而卖家应当注意,错误的声明面临严重的惩罚
  • obtain a notice of variation seeking a lesser withholding rate.获得寻求变更税率的通知

6. What kind of processes will be put in place and how long will things take?
6. 有哪些步骤,需要花多长时间?

The online systems are still being finalised, however, the ATO has advised that:


  • certificates and notices will be available via a simple online system, accessible via the ATO website;证明和通知将可以通过登陆ATO官网,通过简单的在线系统申请获得;
  • clearance certificates should be available within a matter of days, will be valid for 12 months and can be requested well in advance of a specific transaction; and免税证明应该在一定的时间段内发送,有效期12个月。卖方如果满足免税条件,可以在房产交易前几天向政府提出申请;
  • a notice of variation will be a much longer process (eg at least a month).税收变更的过程会更长(如至少需要一个月的时间)。

Some practical examples…


Foreign resident action
Purchaser’s withholding obligation
Sale of real property with market value of AUD 1.1 million


No action required


Nil. The market value is less than AUD 2 million, so it is an excluded transaction (see part 4 above)


Sale of real property with market value of AUD 2.5 million


No notice of variation or declaration provided to purchaser


Purchaser must withhold and remit to ATO full 10% (ie AUD 250,000)


Notice of variation obtained and provided to purchaser prior to completion (eg showing variation from 10% to 6%)


Purchaser can rely on the notice of variation and will withhold and remit to the ATO the varied amount (ie AUD 150,000)


Appropriate vendor declaration provided to the purchaser prior to completion


Purchaser can rely on the declaration if it does not believe the declaration to be false. Purchaser can adjust the amount withheld on completion having regard to the declaration



For further information please contact Leisha de Aboitiz.


Disclaimer: This article is intended to provide commentary and general information.  It should not be relied upon as legal advice. Formal legal advice should be sought having regard to any particular facts or circumstances.

Under the new strata laws, can a “dissenting owner” recover GST on a forced sale?


The short answer is yes, GST will most likely be recoverable as part of the “compensation value” received by a dissenting owner.

 Who is a “dissenting owner”?

A dissenting owner is an owner of a lot which does not support a strata renewal plan prepared in accordance with Part 10 of the Strata Schemes Development Bill 2015.

What is the “compensation value”?

The “compensation value” is the value of a lot determined:

  • pursuant to s55 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Acquisition Act) subject to any modifications prescribed by the regulations; or
  • by any different valuation method prescribed by the regulations.

The regulations are yet to be published, so it is unclear whether the regulations will specifically regulate (or modify) the manner in which the “compensation value” is calculated, and in particular whether or not  GST will be recoverable by a dissenting owner as part of the market value of the dissenting lot.

However, if the “compensation value” is to be determined solely pursuant to the Acquisition Act, then it is most likely that any GST paid (or payable) on the sale of the dissenting lot would form part of the market value of that lot, meaning that a dissenting lot owner would then recover GST as part of the overall value it receives.

Is a dissenting owner entitled to “compensation value” for its lot?

Yes, at a minimum.

When making an order to effect to a strata renewal plan, a court must be satisfied in relation to the compensation being received by lot owners that:

  • in the event of the sale of the entire strata scheme (a “collective sale”), each lot owner must receive not less than the “compensation value”; and
  • in the event of a “redevelopment”, the amount to be paid to a dissenting owner must be the greater of the “compensation value” of the dissenting owner’s lot and the amount which the dissenting owner would have been entitled to had they supported the strata renewal plan.

For further information, please contact Leisha de Aboitiz or Ole Mitrevski.

Can we fix it? Yes, we have to!


An Owners’ Corporation must repair and maintain common property in accordance with section 62 of the Strata Schemes Management Act 1996 (NSW) (the Act). This is an absolute and strict liability duty, and is commonly misunderstood.

A duty of absolute and strict liability

The duty imposed under section 62 is a duty that goes beyond taking reasonable steps or using best endeavours, meaning that an Owners’ Corporation could be in breach of its obligations under section 62 despite:

  • not being aware of the breach;
  • using “best endeavours” to perform the duty; or
  • another person causing or contributing to a breach[1].

This is because section 62 imposes a strict and absolute duty on an Owners’ Corporation to maintain and keep its common property and personal property in good repair; i.e. the obligation is not only to repair damage when it occurs, but to prevent it from occurring in the first place[2].

When there is a breach?

A breach will be taken to occur from the moment any part of the common property or personal property of the Owners’ Corporation (e.g. washing machines, exhaust systems) is not working properly or requires repair, unless the Owners’ Corporation determines not to repair it per section 62(3). It doesn’t matter if the Owners’ Corporation acts promptly in fixing the problem; theoretically, the problem should have never occurred.

What is required?

To comply with its duties under section 62, an Owners’ Corporation must:

  • repair any personal property or common property that no longer operates effectively (or at all) or has fallen into disrepair[3]3; and
  • properly maintain its personal property and common property, including by taking preventative measures (e.g. common property altered without consent should be restored to its original state)[4].

What are the extent of the obligations?

Compliance with section 62 does not require:

  • replacement of inefficient systems with better systems (e.g. a functioning outdated air conditioning system does not need to be replaced with a more efficient system);
  • “improvement” of facilities (i.e. replacement with an equivalent, but not better, system is sufficient); or
  • repair or maintenance of anything specified in a special resolution made under section 62(3).

Resolving not to repair or maintain common property

Pursuant to section 62(3), an Owners’ Corporation may determine (by special resolution) that sub-sections 62(1) and (2) will not apply to certain property, provided that:

  • it is inappropriate to maintain, renew, replace or repair the specified property; and
  • its decision will not adversely impact safety or appearance at the scheme.

There is no need to provide reasons for passing the special resolution, however relevant considerations may include: cost of repair, interference or disturbance, suitability or usefulness etc.

What happens if there is a breach?

Recent case law suggests that a breach of section 62 would most likely give rise to statutory remedies (e.g. an order to comply, rather than damages). However, if malfunctioning or damaged common property causes loss, damage or injury (e.g. to a lot owner or visitor), then the Owners’ Corporation may be exposed to a common law claim for damages (e.g. in negligence).

Some ways to reduce risk associated with a breach, or potential liability flowing from a breach, include:

  • establishing systems to regularly monitor the condition of the common property; and
  • acting promptly to remedy a breach and prevent consequential damage (e.g. consider whether roof damage will cause further damage each time there is a storm).

Tips and traps for strata managers

Regardless of how the repair or maintenance issue arises (e.g. at a general meeting or by notification), it is important to recognise the obligations of an Owners’ Corporation under section 62 and to ensure that:

  • the Owners’ Corporation (and its Executive Committee) understands that that the duty is mandatory and is a strict liability obligation, unless a special resolution is properly passed for affected property;
  • the Owners’ Corporation is proactive and not reactive (e.g. recommend a regular inspection process); and
  • there is no delay in remedying a breach or carrying out repair or maintenance works.

If the Owners’ Corporation or its Executive Committee does not fully appreciate the full scope of the duty, or it appears there is a breach, then consider whether legal advice should be obtained.

For further information, please contact Leisha de Aboitiz or Ole Mitrevski.


DISCLAIMER:  This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought having regard to any particular facts or circumstances.

[1] Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157 – contributory negligence is no defence to the breach of a statutory duty, but a cross-claim may be available.

[2] Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157

[3] Ridis v Strata Plan 10308 [2005] NSWCA 246.

[4] Owners – Strata Plan 21702 v Krimbogiannnis [2014] NSWCA 411.