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Posted by Tony Cheney Conveyancing

FOREIGN RESIDENT CAPITAL GAINS WITHHOLDING

There have been changes to the “Foreign Resident Capital Gains Withholding” (“FRCGW”) rules.

FRCGW first applied to vendors disposing of certain taxable Australian property under contracts entered into from 1 July 2016.
 
New rules for FRCGW apply to vendors of certain taxable property under contracts entered into from 1 July 2017. The changes will apply to real estate 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%).
 
Any contracts exchanged prior to 1 July 2017 with a sale price of $2 million will carry the 10% rate, even if they are not due to settle until after 1 July 2017.
 
Australian resident vendors who dispose of Australian real property with a contract price of $750,000 or above will need to apply for a clearance certificate from the ATO to ensure amounts are not withheld from their sale proceeds. Thus, all real property transactions with a contract price of $750,000 or above will need the vendor and purchaser to consider if a clearance certificate is required. If the vendor fails to provide the clearance certificate by settlement, the purchaser is required to withhold 12.5% of the purchase price and pay that amount to the ATO.
 
We will assist both vendors and purchasers in relation to these new requirements. If you need assistance with buying or selling a property, please contact our office for an obligation free quote.
Information provided on this website is for your general information only. You should contact our office for advice in relation to your personal situation.