The Australian Taxation Office (ATO) has expanded its foreign resident capital gains withholding (FRCGW) rules to apply to all Australian residents who own property anywhere in the country. 

Under the revised regulations, anyone selling property in Australia must provide the buyer with a clearance certificate confirming their status as an Australian resident for tax purposes at the time of settlement or earlier.

The updated rules apply to contracts signed on or after 1 January 2025. Sellers who have signed agreements before are not impacted by the new requirements.

Previously, the FRCGW tax regime applied to foreign and Australian resident property owners with homes valued at $750,000 or more, with a tax rate of 12.5%. Now, the withholding rules apply to all properties sold across the country with a withholding rate of 15%, and the $750,000 property value threshold has been removed.

According to the ATO, if a clearance certificate is not provided by the settlement, 15% of the sale price will be withheld by the purchaser and paid to the tax office. In this case, the seller will only receive any applicable refund after processing their next income tax return for the following tax period.

Apparently, most clearance certificates will be issued within a few days, but the ATO urges vendors to apply early, as they could take up to 28 days to be issued. Each certificate is then valid for 12 months.

References

https://www.ato.gov.au/forms-and-instructions/capital-gains-withholding-clearance-certificate-for-australian-residents-online-application

https://www.ato.gov.au/single-page-applications/frwt-certificate

NOTE: This information is offered as a courtesy.  It is not tax advice. Please get in touch with a tax professional for advice on this subject.