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Australia Foreign Resident CGT Withholding Guide

Australian Foreign Resident Capital Gains Withholding (FRCGTW). The guide covers: the FRCGTW at 15% — the 'FRCGTW' is the 'withholding tax' on the 'sale of the Australian property' by the 'foreign residents' (the 'foreign persons') under the 'Division 14 of the Taxation Administration Act 1953'; the 'withholding rate' is 15% of the 'sale price' (the 'first element of the cost base' or the 'capital proceeds' — the '15% of the sale price' is 'withheld' by the 'purchaser' or the 'buyer'); the 'withholding' applies to the 'taxable Australian property' (the 'TAP') — the 'real property in Australia', the 'mining rights', and the 'shares in the Australian private companies' (the 'indirect Australian real property interests'); the $750,000 threshold — the 'FRCGTW' applies to the 'property sales' with the 'sale price' of $750,000 or more (the 'market value of the property' — the 'threshold was increased from $750,000 to $750,000' — the 'threshold is NOT indexed'); the 'withholding' does NOT apply to the 'property sales below $750,000' (unless the 'vendor is the foreign resident and the purchaser knows or has the reasonable grounds to believe that the vendor is the foreign resident'); the clearance certificate — the 'vendor' (the 'seller of the property') can apply for the 'FRCGTW clearance certificate' from the 'ATO' (the 'clearance certificate application' through the 'ATO online services'); the 'clearance certificate' confirms that the 'vendor is the Australian resident' and the 'withholding does NOT apply'; the 'clearance certificate' is 'valid for 12 months' from the 'date of the issue'; the 'purchaser' (the 'buyer') must 'withhold the 15%' if the 'vendor does NOT provide the 'clearance certificate' or the 'vendor does NOT provide the 'variation notice''; the variation of the withholding — the 'vendor' can apply for the 'variation of the FRCGTW' if the 'withholding amount' (the '15% of the sale price') 'exceeds the expected capital gain' (the 'vendor's CGT liability is less than the 15% withholding'); the 'variation application' is made to the 'ATO' (the 'FRCGTW variation application'); the 'ATO' may 'reduce the withholding' to the 'lower amount' if the 'vendor can demonstrate that the 'actual CGT liability is lower than the 15% of the sale price'; the 'variation' is 'valid for the specific sale'; the penalties for the non-compliance — the 'purchaser' who 'fails to withhold the FRCGTW' may be 'liable for the penalty' of the 'same amount as the withholding' (the 'penalty under the TAA 1953'); the 'purchaser' must 'pay the withheld amount to the ATO within 28 days' of the 'settlement' (the 'payment deadline').

FRCGTW Rate & Threshold

  • 15% of the sale price: The 'withholding rate' is 15% of the 'sale price' (the 'capital proceeds'). The 'withheld amount' is paid to the 'ATO' by the 'purchaser'.
  • $750,000 threshold: The 'FRCGTW' applies to the 'property sales of $750,000 or more'. The 'sales below $750,000' are NOT subject to the 'withholding' (unless the 'vendor is known to be the foreign resident').
  • Taxable Australian property: The 'real property', the 'mining rights', and the 'shares in the Australian private companies' are the 'taxable Australian property' subject to the 'FRCGTW'.

For the non-resident CGT rules and the property tax, see our Non-Resident Taxation Guide →.

Clearance Certificate

  • Australian resident vendor: The 'vendor' who is the 'Australian resident' applies for the 'clearance certificate' from the 'ATO'. The 'certificate' is 'valid for 12 months'.
  • No certificate — withholding applies: If the 'vendor does NOT provide the clearance certificate', the 'purchaser must withhold the 15%'.
  • Application: The 'clearance certificate' is applied for through the 'ATO online services' (the 'myGov' or the 'ATO app').

For the property purchase and the stamp duty, see our State Stamp Duty & Land Tax Guide →.

Variation & Penalties

  • Variation application: The 'vendor' applies for the 'variation' if the '15% withholding exceeds the expected CGT liability'.
  • Purchaser penalty: The 'purchaser' who 'fails to withhold' is 'liable for the penalty' equal to the 'withholding amount'.

For the CGT discount and the cost base treatment, see our Capital Gains Tax Guide →.