If your client had FRCGW withheld from a property sale, they will need to lodge a tax return to have that amount credited to them. This is the case even if their income was below the threshold to lodge a return.
What you will need
Before you start, your client will need to provide a copy of the FRCGW payment confirmation from the purchaser as proof of the amount withheld. Otherwise, they can ask the purchaser for their copy of the payment confirmation notice.
How to claim credit
When completing your client's tax return:
- declare all assessable income, including any capital gain or loss from the sale or disposal of the property, if applicable
- claim a Credit for foreign resident capital gains withholding amounts taken from the sale proceeds at the correct label. Please note that this amount is not 'pre-filled' unlike other withholding credits.
The FRCGW amount will be refunded in full if:
- there are no tax debts
- there’s no CGT payable on the sale of the property.
A credit for the amount withheld for FRCGW applies to the income year the contract was signed.
If the contract is signed in one income year but the purchaser pays the FRCGW to us in the next income year, the capital gain and claim for the credit for FRCGW amounts should be included in the income year the sale contract was signed.
If the tax return is lodged incorrectly you may need to lodge an amendment or objection to apply the credit.
See our website for more information about claiming FRCGW credits and Australian residents and clearance certificates.