Foreign Resident Capital Gains Withholding (FRCGW) Rules

From 1 January 2025 the ATO’s Foreign Resident Capital Gains Withholding (FRCGW) rules changed for both buyers and sellers.

Previously, Australian residents selling property over $750,000 had to provide a clearance certificate to avoid a 12.5% withholding by the buyer.

The new rules remove this threshold and apply to all property sales, regardless of value, with the withholding rate increasing to 15%.

All Australian resident sellers must now get a clearance certificate from the ATO before settlement to prevent the buyer from withholding 15% of the sale price. 

Early application is strongly recommended as processing can take up to 28 days, though issuing can happen within a few days. The certificate is valid for 12 months, so there is some flexibility with timing.

For foreign resident sellers, the 15% withholding applies unless a variation notice is obtained from the ATO to reduce the rate. Buyers are responsible for withholding and remitting the correct amount to the ATO at, or before, settlement if the seller doesn’t provide a clearance certificate.

These apply across all States and Territories so both buyers and sellers need to be aware of this change in order to avoid unexpected costs during property transactions.

More information can be found on the ATO’s website.

If you’d like to know more, book an appointment below or contact us.

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