Global Daily Tax News, Australia Expands Foreign Resident Capital Gains Withholding, (Jan 6, 2025)

Australia has expanded the scope of the foreign resident capital gains withholding (FRCGW) tax requirements.

FRCGW is designed to support the collection of tax liabilities owed by non-residents on Australian property sales.

A withholding tax obligation applies where the vendor fails to provide a clearance certificate, obtained from the ATO, by settlement. In such cases, Australian resident purchasers are required to withhold tax on behalf of the vendor and pay such to the ATO.

The vendor will then receive any refund only after their next income tax return is processed.

Prior to January 1, 2025, the withholding tax rate had been 12.5 percent, and the obligation had applied only to property worth AUD750,000 or more.

For transactions from January 1, 2025, this value threshold no longer applies and the rate has been raised to 15 percent.