Vicki Richards Property Sales
Shop 4 / 180-186 Pascoe Road Ormeau
07 5549 3799
07 5549 2834Contact us
The Federal Government recently announced changes to the foreign resident capital gains withholding (FRCGW) rate and threshold which will take effect from July 1st 2017. These changes will apply to sales where the purchase price is $750,000 and above and the contract has been entered into on, or after 1 July 2017.
In effect, all vendors of property worth $750,000 or more are presumed to be “foreign residents” for the purposes of the Federal Government’s FRCGW regime. Irrespective of whether this is in fact the case, this presumption obliges their purchaser to withhold 12.5% of the contract price and remit it to the ATO. The key exception to this obligation is where the vendor provides the purchaser with a “clearance certificate” from the ATO, at or before settlement.
Where a clearance certificate is not provided, and a purchaser fails to withhold and remit to the ATO 12.5% of the purchase price, the purchaser may become personally liable to the ATO for the amount failed to be withheld. This, in effect, holds the purchaser responsible for meeting the vendor’s taxation obligations.
More detailed information and the application for the clearance form can be found on the ATO website.