Step Five – Review variation notice
Broadly, an amount required to be withheld by a buyer at settlement may be varied (including to nil) where they have received a valid variation notice. A buyer may rely on this notice where:
- the name of the seller and applicable asset details on the notice match those on the certificate of title or other asset ownership documentation; and
- the settlement date is on or before the expiry date on the notice.
The validity of a variation notice may be checked by the buyer with the ATO if desired (although there is no requirement to do so). Refer to ‘Variations’ in the ATO’s factsheet (QC 48972).
Step Six – Withhold, notify and pay
A buyer that is required to withhold (and pay to the ATO) an amount at settlement must complete a ‘Foreign resident capital gains withholding Purchaser Payment Notification’ form. Upon processing of the form, the buyer is issued a payment reference number (‘PRN’), along with a PDF icon that can be clicked to download a payment slip and barcode to use at Australia Post.
These details may be used to pay the withholding amount to the ATO (either by electronic funds transfer, BPAY, in person at Australia Post or by mailing the ATO a cheque). A receipt is provided to the buyer, which should be retained as proof that the buyer has fulfilled their obligations. A payment confirmation is also sent (via email or letter) to the nominated contact on the purchaser payment notification form, which is required by the seller to complete their tax return.
If the buyer fails to obtain a PRN and pay the withholding when they become the owner of the asset, general interest charges will be imposed (subject to a short grace period allowed by the ATO). General interest charges accrue from the date of settlement if the amount is not paid within the grace period. Refer to ‘Paying the withholding’ in the ATO’s factsheet (QC 48972).