What is the Foreign Resident Capital Gains Tax Withholding (FRCGTW)?

On the 1st July 2016, the Commonwealth government enacted the Tax and Superannuation Laws Amendment (2015 Measures No. 6) Act 2015. The legislation was introduced to capture unpaid tax from foreign residents, any vendor selling taxable Australian real property worth $750,000 or more will be subject to the withholding tax unless they apply for a clearance certificate and the certificate is provided to the purchaser by the time of settlement. In accordance with the legislation, all purchasers of real estate worth $750,000 or more must withhold 10 percent of the purchase price unless they are given a clearance certificate by the vendor. The definition of Real estate includes vacant land, residential and commercial property. There are no exceptions. Failure by the vendor to provide purchasers of these properties with the required certificate will result in penalties and interest being paid by the new owners of the land upon settlement.

• IMPORTANT: A purchaser or vendor of real estate worth $2 Million or more MUST obtain tax advice regarding Capital Gains Tax from their accountant or financial adviser BEFORE they sell or purchase such property.

• Clearance certificates can be obtained from the Australian Taxation Office Website by completing the online application form located via the following link; https://www.ato.gov.au/Forms/Capital-gains-withholding-clearance-certificate-application-online-form-and-instructions---for-Australian-residents