Changes to the foreign resident capital gains withholding (FRCGW) regime are effective on and from 1 January 2025.
All parties to a real property transaction in Australia must ensure timely compliance with the changes.
Application
The changes apply to all acquisitions occurring on or after 1 January 2025.
An acquisition is taken to occur on the date of contract.
Summary of changes
Schedule 1 of the Taxation Administration Act 1953 (Cth) has been amended pursuant to the Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Act 2024 (Cth) on 10 December 2024 as follows:
- increasing the withholding rate from 12.5% to 15%; and
- removing the threshold of $750,000.
This means that:
- all sellers must submit a clearance certificate to the purchasers within the time required under the contracts; and
- if a clearance certificate is not given by the sellers, the purchasers must withhold and pay the correct amount to the Taxation Office.
Key takeaway
All parties in a real property transaction must take note and ensure timely compliance with the changes to FRCGW regime.
If you would like to discuss this article with us, please contact Yanlie Leung, Senior Associate on (02) 9261 5900.