The foreign resident CGT withholding (FRCGW) regime was introduced with effect from 1 July 2016 to address low levels of compliance by foreign residents with their Australian tax obligations.
The regime imposes a non-final withholding obligation on a purchaser who acquired certain Australian real property interests from a foreign resident vendor. Presently, the rate of withholding is 12.5%. The foreign resident vendor is entitled to a credit for the amount withheld upon the lodgement of an income tax return and the making of an income tax assessment. Excess credits are refundable to the vendor by the Commissioner of Taxation. Under the current rules, a FRCGW obligation does not arise if the market value of the relevant asset is less than $750,000. Changes proposed by Treasury Laws Amendment (2024 Tax and Other Measures No1.) Bill 2024 will:
- increase the FRCGW rate to 15 per cent, and
- remove the threshold before which withholding applies.
The changes are intended to operate from the later of 1 January 2025 or the date on which the relevant legislation receives Royal Assent.
Feel free to contact our team should you want to discuss this topic further and potentially have clients who may be in this situation.
This publication is not intended to be and should not be used as a substitute for taking taxation advice in any specific situation. The information in this publication may be subject to change as taxation, superannuation and related laws and practices alter frequently and without warning. Neither BNR Partners Pty Ltd, our employees or agents are responsible for any errors or omissions or any actions taken or not taken on the basis of this publication.