Foreign Resident Capital Gains Withholding: Who Qualifies and What You Get
Learn about the tax obligation for buyers purchasing Australian real property from foreign residents to ensure proper tax withholding.
This mechanism ensures that foreign residents selling Australian real property pay the required tax on their capital gains.
Who it's for
This applies to anyone purchasing Australian real property with a value exceeding $750,000.
What you get
It provides a structured way to ensure that foreign sellers meet their tax obligations regarding the profit made from the sale of their property.
What it costs you
If you are the purchaser and you do not provide a clearance certificate, you are responsible for withholding 12.5% of the purchase price. This amount must be sent to the tax office.
The catch to know
The biggest risk is for purchasers who fail to withhold the required amount when the seller is a foreign resident. It is your responsibility to confirm the seller's status.
How to apply
- Determine if the property value is above the required threshold.
- Check if the seller is a foreign resident.
- Request a clearance certificate from the seller to prove they are not a foreign resident.
- If no certificate is provided, calculate the withholding amount and remit it to the tax office.