When does the foreign resident CGT (Capital Gains Tax) Withholding apply in Real Estate?

All purchasers of real estate worth $750,000 or more must withhold 12.5% of the purchase price from the seller unless the seller can provide a clearance certificate from the Australian Taxation Office (ATO). This is known as the foreign resident capital gains withholding (FRCGW).

The FRCGW amount is withheld to ensure that foreign residents pay their fair share of capital gains tax on the sale of Australian real estate. The ATO will then refund the FRCGW amount to the seller once they have filed their tax return and paid any capital gains tax that is due.

There are a few exceptions to the FRCGW requirement. For example, the FRCGW does not apply to sales to foreign governments or international organizations.

Additionally, the FRCGW does not apply to sales where the seller is a resident of a country with which Australia has a double taxation agreement.

Important for Purchaser’s to note that penalties do apply if you fail to withhold the FRCGW.

Contact us today to learn more about FRCGW and how we can help to ensure a Purchaser is not penalised and the Seller correctly obtains a clearance certificate.

Bond Conveyancing Property Lawyers:-

1300 039 559

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