In estimates I asked Treasury why they don’t track rental payments made offshore and why they don’t require rental agents to withhold tax on those payments.
This isn’t just about money laundering (which is a very valid concern), but why does the government give a free kick to foreign landlords and real estate agents.
Employers have to withhold tax from employees and send those payments to the ATO. Why doesn’t the ATO apply the same rules to the real estate industry?
It’s a bit rich for Treasury to be passing the buck to the ATO. The rate of Withholding tax on offshore rents is a policy issue and Kennedy should have answered why they don’t charge it.
Committee on 6/11/2024
Item: Economics Legislation Committee – 06/11/2024 – Estimates – TREASURY PORTFOLIO – Department of the Treasury
Senator RENNICK: I note in the last year the Australian Federal Police seized 3,000 hectares of Tasmanian farmland purchased by Chinese nationals using the proceeds of crime. Just about every business has to do ATO reporting. A small business, for example, with just one employee has to report a single payslip under Single Touch Payroll. Why does the real estate industry get a pass on this? Given that the real estate industry has to do annual software reporting, why can’t they report to the tax office how much money in rent they receive and in particular how much rent they pay offshore? I note there’s withholding taxes on dividends, interest and royalties, but there doesn’t seem to be any withholding tax on rents paid offshore.
Dr Kennedy: I might ask Mr Tinning if he can comment. Are you placed to comment on this issue?
Mr Tinning: I think that’s probably best directed to the ATO, who are appearing later this afternoon.
Senator RENNICK: I will ask the ATO, but I would have thought given this is to do with the whole issue of money laundering through the real estate industry and we’ve got a housing crisis as well, if we were to crack down on this type of behaviour we could free up some more housing.
Dr Kennedy: A real estate and monetary-laundering perspective is quite a reasonable issue and the government is looking at that issue. Have you talked to the Attorney-General’s Department about it as well, about their policy?
Senator RENNICK: No.
Dr Kennedy: That’s where the money-laundering policy starts, and you’re talking about its intersection with the foreign investment regime.
Senator RENNICK: Yes.
Dr Kennedy: We’re not well placed to answer your specific questions, but I can agree with you straight up; they are important issues. Apologies, we haven’t—
Senator RENNICK: I’ll come back to the ATO on that as well. I will follow that up with them.
Dr Kennedy: I’m happy to take your question on notice and provide an answer on notice if that’s helpful.
Senator RENNICK: Yes, that’s fine.
