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
