ATO property taskforce to go “kapow” on illegal purchases

ATO property taskforce to go “kapow” on illegal purchases


I was left eating humble pie this week following comments I made in an interview that appeared in the Australian Financial Review pertaining to the federal government’s announcement that another six homes had been identified as being acquired illegally and a further 462 sales under investigation. My response was “It’s nothing more than a PR stunt and a distraction. It’s been done for feel-good cuddles” – how wrong was I.

Later that day, I received an email from the Australian Taxation Office (ATO) boss heading up this investigation which (politely) outlined the detail of their inquiry which clearly identified the magnitude of this investigation which earnestly commenced in May this year. Owners of property bought illegally must voluntarily contact the ATO prior to 1 November 2015 to receive an amnesty of not being prosecuted.

Now once and for all, we will find out exactly what’s been happening as I have been saying for quite some time that this is rife within the real estate industry. It will be fascinating to see what recommendations are made and then implemented. I have been a strong proponent of tax file numbers being provided to the ATO on the exchange of contracts for every residential sale. It will also be interesting to see if the 100 per cent selling ratio for all new developments is brought back to 50 per cent as it was in 2008? Opening up our property markets to international exposure has certainly led to rapid price growth from Asian property investors.

Australia had a record number of 1.7 million international tourists visit last year which included a 21 per cent surge from China.

Chinamans_Beach

SYDNEY AERIAL PHOTOGRAPHY

This inquiry is timely given the number of recent global warnings of money laundering in real estate where Sydney and Melbourne have been suggested as hot spots. Residential property in Australia is the single largest and most valuable asset class worth an estimated $5.7 trillion. Sydney now ranks third in the world for luxury residential annual price growth according to Knight Frank’s Prime Global Cities Index. Sydney’s 12.5 per cent growth now sits just behind Miami on 13.9 per cent and Vancouver on 15 per cent annual price growth. The report also identified that “a year ago eight cities recorded double – digit annual price growth. This quarter only four cities fell within this bracket.”

China’s shock devaluation significantly raises the risk that the Reserve Bank of Australia (RBA) will be forced to cut the cash rate further which is a worst case scenario for the RBA. More particularly when this week Deputy Governor Philip Lowe said “Given the position of household balance sheets, it is unlikely to be in our long – term interest for a consumption boom to be financed by a pick –up in household borrowing.”

“Ever – rising house prices, relative to our incomes, do increase risks in the economy and are unlikely to make us better off as a nation. Rising housing prices are best matched by rising incomes.”

Then of course we will have to wait to see how many divestment orders are issued by the ATO where hopefully the owners won’t be allowed to “flip” which was the case when Villa del Mare was issued with the first divestment order a few months back.

Another interesting aspect will be closely watching the Sydney and Melbourne clearance rates now that it is very clear the role that the ATO is playing with their pursuit of illegal purchases given that I am not the only one who thought this was all political shirt – fronting.

MOSMAN – 2088

• Number of houses on the market this time last year – 63

• Number of houses on the market last week – 48

• Number of houses on the market this week – 47

• Number of apartments on the market this time last year – 55

• Number of apartments on the market last week – 41

• Number of apartments on the market this week – 40

CREMORNE – 2090

• Number of houses on the market this time last year – 7

• Number of houses on the market last week – 3

• Number of houses on the market this week – 2

• Number of apartments on the market this time last year – 14

• Number of apartments on the market last week – 30

• Number of apartments on the market this week – 18

NEUTRAL BAY – 2089

• Number of houses on the market this time last year – 4

• Number of houses on the market last week – 2

•Number of houses on the market this week – 2

• Number of apartments on the market this time last year– 36

• Number of apartments on the market last week – 26

• Number of apartments on the market this week – 25

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.

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For this week’s open for inspections

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Source: APM Price Finder

One Response to “ATO property taskforce to go “kapow” on illegal purchases”

  • John Butler says:

    I suspect the ATO’s comments are just more bluster. It seems to me they are uninterested in addressing this large-scale Chinese money laundering problem, indeed they even seem to be encouraging it. Aussie property is becoming unaffordable for the average Aussie and the next generation has absolutely no chance of getting a foot on the property ladder. This is a big price to pay. The blame shouldn’t stop with the ATO, it goes all the way up to our incompetent treasurer.

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