National changes to the Foreign resident capital gains Withholding Tax

On 9 May 2017, the Government announced proposed changes to the foreign resident capital gains withholding (FRCGW) rate and threshold. The changes will be as follows:

  • Real property disposals from 1 July 2017 (where contracts are signed after 1 July 2017) where the market value is $750,000 or more.
    • This is currently only where there is a market value of $2 million or more
  • All contracts settled on or after 1 July 2017 where the FRCGW applies will be subject to a withholding tax rate of 12.5%
    • The withholding rate is currently 10%.

The holding obligation is with the purchaser and/or their representative to withhold 12.5% of their deposit monies, where the vendor is a relevant foreign resident.

To avoid the withholding tax the Australian resident vendor or their representative must supply a current clearance certificate from the ATO, prior to or at settlement.

We recommend you apply early online for these at https://www.ato.gov.au/forms/foreign-resident-capital-gains-withholding-clearance-certificate-application-instructions/

For more details concerning this change SAI Global will be holding an education webinar, which will cover this and the new VIC SRO all-in-one digital form, for more details please subscribe to our monthly settlement newsletter. Or for more information in the meantime please visit  the ATO website.

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Disclaimer: The information herein has been prepared by SAI Global Property Division Pty Ltd ACN 089 586 872 from information released by the Authority cited on this page. It is provided as general background information only; it is not complete; and it does not comprehensively address this subject matter. Readers should not consider the information so provided as advice nor as a recommendation to take any particular course of action. Persons needing advice should consult their own solicitor, accountant or other professional adviser.