Australian tax can arise on gains from the sale of investments in Australian entities

By Joanne Dunne

Foreign investors in Australian entities may be unaware that in some circumstances the Australian Taxation Office (ATO) can assess them for Australian tax on gains made from the sale of their investment. Law changes are also proposed that (among other matters) would, from 1 July 2016, require purchasers to withhold 10 per cent from the purchase price and pay that to the ATO in some circumstances. 

If such an assessment is issued, the ATO also has powers to collect that assessment, including to garnish or freeze the proceeds of sale to satisfy the assessment before those proceeds are remitted offshore. In our experience, the ATO issuing such assessments and garnishee notices has become more common, and foreign resident investors are not always aware how to react to, and in some cases how to, challenge those assessments.

This article describes in general terms when such Australian tax could arise and, if an assessment does arise to a foreign investor, how to deal with it…

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