Change to Foreign Resident Capital Gains Tax Withholding

For those of you considering buying or selling real estate in the near future you may be aware that there is a Foreign Resident Capital Gains Withholding (“FRCGW”) which, in the case of real property being sold for a price of $2m or more, requires the purchaser to withhold 10% of the purchase price from the vendor (whether he or she is a foreign resident or not) and to submit this sum to the Australian Tax Office on account of possible capital gains tax liability UNLESS a clearance certificate  from the ATO is provided to the purchaser by the vendor before settlement.

The big news is that as from 1 July 2017 (subject to Commonwealth legislation passing beforehand) the FRCGW will apply to the sale of real estate where the price is $750,000 or more (basically everything in Sydney!) and the withholding amount will be at the rate of 12.5%.