Prior to 1 January 2025, when a property was sold with a sale price or market value of $750,000.00 or more, the Australian Taxation Office’s Foreign Resident Capital Gains Withholding scheme (FRCGWC Scheme) required the seller of property to apply for a Foreign Resident Capital Gains Withholding Clearance Certificate (Clearance Certificate) from the Australian Taxation Office (ATO) and provide the Clearance Certificate to the purchaser, prior to completion of the sale. In the absence of the vendor providing the Clearance Certificate, or where there was otherwise an obligation to withhold, the Purchaser was obliged to pay 12.5% of the price directly to the ATO on completion of the sale.
What’s Changing?
From 1 January 2025, the $750,000.00 threshold has been removed, meaning the FRCGWC Scheme applies to the sale of all properties, regardless of the sale price. All vendors will need to obtain a Clearance Certificate and provide this to their purchaser prior to completion. Additionally, the amount of the sale price that the purchaser must remit to the ATO has increased from 12.5% to 15% where there is an obligation to withhold.
Who will the changes affect?
The changes will apply to all contracts entered on or after 1 January 2025.
The changes mean that from 1 January 2025 anyone selling their property will be required to obtain the clearance certificate from the ATO and provide this to their purchaser prior to completion. The obligation to withhold will also apply to all purchasers of property.
Failure to do so means that the purchaser is obligated to pay 15% of the sale price directly to the ATO on completion.
If you need help buying or selling property in 2025, please reach out to our team at office@jenkinslegal.com.au or call 02 49292000.
This article is not legal advice, and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.
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