Australian residents selling real property will need to obtain a clearance
certificate prior to settlement to avoid incurring the 12.5%
non-final withholding tax that is applicable to foreign residents. The Australian Taxation Office (ATO)
requires 12.5% of the sale price to be withheld by the purchaser unless the vendor produces the clearance
certificate indicating that they are an Australian resident.
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%).
