Capital Gains Withholdings

Capital Gains Withholdings: Impacts on foreign and Australian residents

Foreign resident capital gains withholding (FRCGW) applies to vendors disposing of certain taxable property under contracts entered into from 1 July 2016.

The FRCGW tax rate is 12.5%.

It imposes an obligation on purchasers to withhold 12.5% of the purchase price and pay it to the ATO, where a vendor enters into a contract on or after 1 July 2017 and disposes of certain asset types (or receives a lease premium for the grant of a lease over Australian real property). Foreign resident capital gains withholding doesn’t apply when the vendor disposes of either:

• an Australian real property and provides the purchaser with a clearance certificate from ATO
• any other asset where the purchaser is given a vendor declaration.

CMT Accounting can help you in understanding the background of this new rule and notify the ATO through the completion of foreign resident capital gains withholding clearance certificate application form as well as the variation form.

For more detail, please contact the office at (03) 8525 7100 or email info@cmtaccounting.com.au.