Foreign resident capital gains withholding (FRCGW) was first introduced for 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.

From 1 July 2017, the withholding rate increased to 12.5% and the threshold was lowered to apply to real property disposals with a contract price of $750,000 and above (previously $2 million). These rules continued to apply to contracts entered into from 1 July 2017 through to 31 December 2024.

From 1 January 2025, new rules apply again. The FRCGW withholding rate has increased to 15%, and the $750,000 threshold has been removed entirely. This means the withholding obligation now applies to all real property sales in Australia, regardless of the contract price, where the vendor is a foreign resident for tax purposes.

The previous thresholds and rates will continue to apply to contracts entered into before 1 January 2025, even if settlement occurs after that date.

 
 
 
 

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)