Author: Harsha Perera

• Knowledge Sharing
• January 7, 2025

Important Changes to FRCGW effective from January 1, 2025

The Australian Taxation Office (ATO) has implemented significant amendments to the Foreign Resident Capital Gains Withholding (FRCGW) regime, effective from January 1, 2025. These changes impact both Australian residents and foreign investors involved in property transactions across Australia. Understanding these changes is critical for sellers and buyers to ensure compliance and avoid penalties. Key Changes: 1. Increased Withholding Rate: The withholding rate has increased from 12.5% to 15% of the property's sale price, making it more important than ever for sellers and buyers to be aware of their obligations under the FRCGW. 2. Removal of Monetary Threshold: The previous exemption threshold of $750,000 has been removed. Now, all property sales, regardless of value, are subject to the FRCGW requirements. This marks a significant shift, particularly for lower-value property transactions that were previously exempt. Implications for Property Sellers: • Australian Residents: Sellers must obtain a clearance certificate from the ATO and provide it to the purchaser at or before settlement. Without this certificate, the purchaser is obligated to withhold 15% of the sale price and remit it to the ATO. To avoid unnecessary complications, it is advisable to apply for the clearance certificate early, as processing can take up to 28 days (though most are issued within a