FRCGW Rule Change
FRCGW Rule Changes
Commencing on 1 January, 2025, the Foreign Resident Capital Gains Withholding rules are changing.
For the uninitiated, Foreign Resident Capital Gains Withholding (FRCGW) is a tax implication for foreign residents who own property in Australia. , To ensure foreign residents pay their fair share of tax, when a foreign resident sells their taxable Australian property, a certain percentage of the sale value is withheld to the Australian Taxation Office (ATO).
Under the new FRCGW rules, two changes will occur.
- the withholding rate will increase from 12.5% to 15%
and
- the $750,000 property value threshold will be removed and the withholding rules will apply to all property transfers.
This means that for all real property transactions, all vendors are required to supply a valid clearance certificate from the ATO, or withholding will apply. Without a valid clearance certificate at or before settlement, 15% of the market value of the property (typically the purchase price) or an ATO approved varied amount must be withheld by the purchaser and paid to the ATO at settlement.
If you have any other questions about the rule change, please do not hesitate to contact me. I am here to help.