Changes to Foreign Resident Capital Gains Withholding
The Australian Government has recently made changes to the rules relating to Foreign resident capital gains withholding (FRCGW). These changes came into effect on 1 January 2025.
I wrote about this in 2017, when the last changes were made. See here: https://www.noosa4sale.com.au/post?post_id=9484
Under the previous rules, if a property in Australia was sold for $750,000 or more, the seller/s had to provide an ATO clearance certificate to the buyer/s before settlement. Otherwise, an amount equal to 12.5% of the purchase price was withheld at settlement and paid to the ATO for FRCGW.
From 1 January 2025:
- the withholding rate will increase from 12.5% to 15%; and
- the $750,000 property value threshold will be removed, and the withholding rules will apply to all property sales.
This means that all seller/s selling property in Australia regardless of the property value, will be required to provide an ATO clearance certificate to the buyer/s before settlement. Otherwise, the buyer is required to withhold 15% of the purchase price to be paid to the ATO at settlement.
The changes apply to contracts entered into on or after 1 January 2025.
Apply for your certificate here: https://www.ato.gov.au/single-page-applications/frwt-certificate