The FRCGW rules have changed from 01 January 2025. The ATO advises that these rules are in place to ‘support the collection of tax liabilities owed by non-residents selling Australian property’.
Previously, Australian residents disposing of assets over $750,000.00 were required to provide the Purchaser of the asset with a ‘clearance certificate’ from the ATO at or before settlement to avoid 12.5% of the purchase price being withheld and remitted to the ATO. When a clearance certificate is produced, the seller is not deemed to be an Australian taxpayer and, therefore, no additional amount is required to be withheld at settlement.
The 2025 changes are as follows:
the withholding rate will increase from 12.5% to 15%; and
the $750,000 property value threshold will be removed, and the withholding rules will apply to all property sales.
The above applies to all contracts entered into on or after 01 January 2025.
If a clearance certificate cannot be produced, and the 15% is withheld and remitted to the ATO at settlement, the vendor will only receive any refund due after their next income tax return is processed at tax time.
To avoid the funds being withheld, it is important to provide our office with at least 28 days' notice of the sale of an asset. That way, we can apply to the ATO and have ample time to await the return of the clearance certificate.
At Andrews Crosthwaite, we understand that stress and anxiety can sometimes be related to the settlement process in conveyancing transactions. We try to make your journey easy! Our firm endeavours to provide guidance and comprehensive communication with our clients during the entire settlement process.
If you have a conveyancing matter you’d like us to assist you with, please contact us on PH: 9450 9400
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