ATO Foreign Resident Capital Gains Withholding Clearance Certificate
Foreign resident capital gains withholding first applied to vendors disposing of certain taxable Australian property under contracts entered into from 1 July 2016. A 10% non-final withholding applied to these transactions at settlement.
New rules for foreign resident capital gains withholding (FRCGW) apply to vendors disposing of certain taxable property under contracts entered into from 1 July 2017. The changes will apply to real property disposals where the contract price is $750,000 and above (previously $2 million) and the FRCGW withholding tax rate will be 12.5% (previously 10%). The existing threshold and rate will apply for any contracts entered into from 1 July 2016 and before 1 July 2017, even if they are not due to settle until after 1 July 2017.
What do I need to Do?
If applicable you will need to obtain a Clearance Certificate from the ATO. Generally the certificate comes back quite quickly however it can take 28 days or more in some situations. For this reason we recommend Vendors apply as soon as possible. At the absolute latest you need to have the certificate from the ATO to hand to your Purchaser 14 days from settlement.
Applications are free and can be started online on the ATO website here. Once the application form is filled out, you can also lodge it online for faster processing or print and mail/fax the form to the Australian Taxation Office.
Your conveyancer, tax agent or legal practitioner may help you through the process of applying for the ATO clearance certificate. They may even apply on your behalf as your representative depending on their legal training. This may incur additional fees.
You will need some important information before you start. Before you begin the application process, make sure you have:
Vendor tax file number (TFN) or Australian business number (ABN)
Vendor details (name, email, phone number, address, etc.)
Expected contract and settlement dates
Contact person details (for any additional questions)