Foreign Resident Capital Gain Withholding
There are new rules for contracts entered from 1 July 2017 for Foreign Resident Capital Gain Withholding (FRCGW) that apply to vendors for disposing certain taxable property.
The new legislation applies to the disposal of real property where the contract price is $750k or more. Previously the rules apply to real property disposals with contact price of $2million with FRCGW withholding tax rate of 10%. The new FRCGW withholding tax rate is now 12.5%.
If you are an Australian resident selling real property where the contract price is $750k or more, you will need to obtain a clearance certificate prior to settlement to avoid the 12.5% non-final withholding tax that is applicable to foreign residents. The purchaser is required by the Australian Taxation Office to withheld 12.5% of the sale price unless you provide the clearance certificate as proof that you are an Australian resident.
Contact our office today to find out more or if you require assistance in obtaining the clearance certificate!