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%).