Foreign ownership of Australian farmland has been dominating headlines recently, and given the composition of the Senate following the recent federal election, that situation is unlikely to change any time soon.
There are certain patches of rural SA that have had a dramatic shift in the nationality of landowners, and we all continue to watch the Anna Creek sale proposal with great interest.
Beyond politics, there are some recent changes that buyers of farmland need to be aware of.
As of July 1, sales or leases of 'real property' (land) with a value of $2 million or more will be subject to a new capital gains tax witholding regime.
Broadly speaking, if the seller of land is a foreign resident, then the purchaser is required to withold 10 per cent of the purchase price and provide that amount to the Australian Taxation Office.
The measure has been introduced to prevent foreign landowners from avoiding the payment of capital gains tax.
It is worth noting that the definition of foreign resident is very broad and you might be surprised at who falls within this category.
There are some exclusions to the policy, and there is a lot of fine print, so if you are thinking of being involved in a property transaction which could have a value of $2 million or more, it is important to seek legal and accounting advice to ensure you comply with the new regime.
By Joe Anderson, Partner
This article was originally published in The Stock Journal on Thursday 14 July 2016.