Foreign residents selling property in Australia - tax update

Foreign resident capital gains withholding (FRCGW) of 12.5% applies for all property sales of AUD$750,000 or more. At a minimum, that is AUD$93,750 being withheld from the sale and paid to the Australian Tax Office, unless there is an approved variation.

The most common reasons why a seller may apply for a variation includes:

• making a capital loss
• not having an income tax liability
• foreclosure.

In 2023 over 60% of applications for variations were lodged late, affecting settlement. When clients are too late in applying, the conveyancer or solicitor has no choice but to withhold 12.5%.

Tips:

• Include the sales contracts with the variation application
• Variations must be lodged online at least 28 days before property settlement to ensure processing time
• The main residence exemption doesn't apply to foreign residents
• Australian residents for tax purposes must have a clearance certificate before settlement to prove their residency for tax purposes, so no withholding occurs.

For more information please contact Allan Hall International Services

About Allan Hall Business Advisors:

Award winning Allan Hall Business Advisors is Alliott Global Alliance’s representative accounting, audit and tax member in New South Wales.

Based in Sydney, Allan Hall has built a reputation for offering strategic financial guidance and accounting and advisory services to a range of clients from individuals, to small businesses, through to subsidiaries of international corporations looking to expand elsewhere in Australia and worldwide.

Established in 1957, the firm has satellite offices in Brisbane and Adelaide and has grown to become one of the largest, non-CBD, integrated chartered accounting and business advisory firms in Australia. Read more.