You’re not an Australian Citizen until the ATO says you are.

From 1 July, all home owners selling a property worth more than $2 million will have to obtain certification from the ATO proving their residency, or face a 10% withholding tax.

In the latest of a raft of measures aimed at cracking down on foreign property investors, the ATO will now require all owners selling a property worth more than $2 million to obtain certification of their residency.

Even those born in Australia and considered an Australian Citizen for other taxation purposes will be deemed a foreign resident if they do not obtain certification of their residency at the time of sale.  Yes, it’s as silly as it sounds.

The flow on effects may be interesting also as the ATO may use the opportunity to recover debts that a home seller may have with the ATO.  Audits may also become more frequent.

Failure to obtain the necessary documents will result in the owner paying a 10% withholding tax when they sell their property.

The measure is designed to clamp down on foreign property owners who avoid paying capital gains tax when they sell Australian properties.

The move comes amid a slew of measures aimed at curbing foreign property investors.

All four of the major banks have curbed lending to foreigners, and Citigroup’s local arm will no longer approve mortgage applications that rely on income in five Asian currencies.

The Foreign Investment Review Board has also cracked down on unlawful purchases, forcing foreigners to sell 27 properties worth more than $76 million.

The impact will be felt most strongly in Sydney and Melbourne. Almost 4.5% of homes on the market in NSW are worth more than $2m, and almost 2.5% in Victoria.