Foreign Resident Capital Gains Withholding Changes

If you’re selling property in Australia, you may need to be aware of Foreign Resident Capital Gains Withholding (FRCGW).

This is a rule designed by the Australian Taxation Office (ATO) to ensure that foreign property owners pay tax on any capital gains they make when selling property in Australia.

Under this rule, the buyer (not the seller) must withhold a portion of the purchase price and send it directly to the ATO, unless the seller proves they are an Australian tax resident by providing a valid ATO Clearance Certificate by settlement.

Starting on 1 January 2025, the ATO has implemented changes to the FRCGW rules:

1. Removal of property value threshold: previously, properties valued at under $750,000 were exempt from withholding. This threshold has been removed, and the withholding is now applicable to all property sales.
2. Increased withholding rate: the withholding rate has increased from 12.5% to 15%.

Consequently, all sellers must provide a clearance certificate to buyers before settlement to avoid the 15% withholding. We recommend applying for this certificate early, as processing times may vary (up to 28 days).

If you have any questions about the changes or FRCGW generally, please contact our friendly and experienced team on 1300 765 488.