Show download pdf controls
  • Foreign resident capital gains withholding payments

    Foreign resident capital gains withholding first applied to vendors disposing of certain taxable Australian property under contracts entered into from 1 July 2016. A 10% non-final withholding was applied to these transactions at settlement.

    The assets subject to the withholding tax are:

    • taxable Australian real property with a market value of $750,000 or more
    • an indirect Australian real property interest
    • an option or right to acquire such property or interest.

    New rules for foreign resident capital gains withholding (FRCGW) apply to vendors disposing of certain taxable property under contracts entered into from 1 July 2017. The changes will apply to real property 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%). The existing threshold and rate will apply for any contracts that are entered into from 1 July 2016 and before 1 July 2017, even if they are not due to settle until after 1 July 2017.

    Where the seller of these Australian assets is deemed a foreign resident, the buyer must pay 10% or 12.5% of the purchase price (depending on the date of the contract) to the ATO as a foreign resident capital gains withholding payment.

    The foreign resident seller can claim a credit for the foreign resident capital gains withholding payment by lodging a tax return for the relevant year.

    See also:

    Last modified: 17 Jul 2017QC 52305