The Government clearly had this in mind when it announced in the 2017 budget that the Foreign Capital Gains Tax Withholding threshold would be decreased from $2M to $750K from 1 July, 2017 for foreign vendors of Australian property.
The amount to be withheld from foreign vendors at settlement has also increased from 10% to 12.5% from any sale over the threshold. Foreign Investors may be able to get an exemption from the ATO if they can show reasonable cause that no tax will be payable on the sale (eg if they can prove a loss has been made on the property).
This will give a healthy boost to the ATO's cashflow for the period it takes for the foreign vendor to lodge a tax return to claim any refund back (if eligible). It's a measure that doesn't cost the Government votes, however these Foreign investors can always choose to 'vote' by placing their capital in another country....and then we all lose.
The number of properties selling for more than $1 million has continued to grow despite attempts to improve housing affordability, recent research by CoreLogic has found. In its latest Property Pulse paper, research analyst Cameron Kusher said that property prices just keep rising, with the proportion of houses on the market for more than $1 million set to eclipse affordable housing. “With dwelling values continuing to climb, we anticipate that in another 12 months we’ll see an even higher proportion of sales sitting at or above $1 million,” Mr Kusher said. “The flip side to this is that the ongoing increase in the proportion of residential properties selling in excess of $1 million highlights the ongoing deterioration in the availability of housing affordability.