ATO Tax Change
With the new year comes important updates, particularly in the property sector, that we want to bring to your attention.
Effective January 1, 2025, significant changes to Australia’s Foreign Resident Capital Gains Withholding (FRCGW) regime have been introduced.
Key updates include:
> The withholding tax rate has increased from 12.5% to 15% for relevant property transactions.
> The previous minimum property value threshold of $750,000 has been removed, meaning all property transactions, regardless of value, are now subject to FRCGW.
These changes apply to contracts signed on or after January 1, 2025. Contracts signed before this date will still follow the previous rate and threshold.
What Does This Mean for Sellers?
Australian residents selling property must obtain a clearance certificate from the Australian Taxation Office (ATO) before settlement to avoid the 15% withholding. Without this certificate, purchasers are required to withhold 15% of the sale price and remit it to the ATO.
For further details, click here to visit the Australian Taxation Office (ATO) official page and stay informed about these updates.