Changes to foreign residents capital gains withholding

Published by MFAA

The ATO has introduced changes which affect all Australian residents selling property.

The changes to the foreign resident capital gains withholding (FRCGW) legislation means all Australian residents now require a clearance certificate from the ATO for all property contracts signed on and after 1 January 2025, regardless of the sale price.

Without a clearance certificate, the tax must be withheld from the sale proceeds by the purchaser and paid to the ATO.

Australian residents selling property can apply for a certificate (free of charge) from the ATO – they don’t need to wait until they sign a contract. The seller must provide the certificate to the purchaser before the settlement date.

Foreign residents may incur capital gains tax on the sale of Australian property, and the 1 January changes mean the withholding rate has increased from 12.5% to 15%. The $750,000 property value threshold has also been removed.

For more information on the changes to Foreign Residents Capital Gains Withholding and how the tax works, visit the ATO website