From 1 July 2016, new requirements were imposed on property buyers (including some buying an option) under the Tax and Superannuation Laws Amendment (2015 Measures No. 6) Act 2016 (Cth). These requirements are changing on 1 July, 2017.
The requirement means that unless a vendor demonstrates it is not a foreign resident then the purchaser must withhold and pay to the ATO the withholding amount.
From 1 July 2017, ALL buyers of Australian real estate, valued at $750k or over, MUST retain 12.5% of the purchase price and pay this amount as withholding tax to the ATO UNLESS the seller produces an ATO clearance certificate or a variation notice prior to settlement.
The $2m and 10% threshold will apply to contracts entered before 1 July 2017, regardless of when they settle.