loader image

Home > Blog > New withholding obligations for Australian real estate

New withholding obligations for Australian real estate

Date: 30 September 2016

The new Foreign Resident Capital Gains Withholding (FRCGW) regime commenced on 1 July 2016 and imposes withholding obligations on purchasers of certain assets which are classified as Taxable Australian Property (TAP). TAP includes direct interests in land, leases and mining rights and indirect interests in Australian real property such as shares in certain companies that own TAP. The FRCGW regime is aimed at improving the collection of tax liabilities from foreign residents when they have disposed of Australian assets. It is important to note that these rules place the responsibility of withholding and payment of the tax on the purchaser.

In relation to real property transfers for more than $2 million, a purchaser is required to remit 10% of the purchase price to the ATO. Importantly, the rules assume that all vendors are foreign residents unless a clearance certificate or vendor declaration has been provided to the purchaser.

If you are involved in a real estate transaction in excess of the $2 million threshold, Roberts & Morrow can assist in advising on your withholding obligations (for purchasers) or obtaining the necessary clearance certificate or declaration (for vendors).

UPDATE: From 1 July 2017 the FRCGW regime was changed in two ways. Firstly the property threshold was reduced from $2 million to $750,000. Secondly the withholding tax rate increased from 10% to 12.5%.

Start today

To discuss with one of our estate planning experts. Start by emailing us at enquiries@rm.net.au

Contact Us +

Know More

NSW First home buyer property tax

NSW First home buyer property tax

From Saturday 12 November 2022 first home buyers can opt in to pay an annual property tax rather than stamp duty when buying their first home. The Bill to introduce this measure has completed its passage through NSW parliament and received assent today [Friday 11...

read more
Are Your Contractors Employees?

Are Your Contractors Employees?

Two landmark cases before the High Court highlighted the problem of identifying whether a worker is an independent contractor or employee for tax and superannuation purposes. Many business owners assume that they will not be responsible for PAYG withholding,...

read more
Succession planning – NSW farming families

Succession planning – NSW farming families

The stamp duty exemption for farms in NSW has recently been broadened and will greatly increase the succession planning options available to families in the rural sector.   The past exemption for transferring farming properties between generations requires the...

read more