From the 1st of January 2025, there was a requirement change for when it comes to selling real estate. The requirement used to be that, when the Contract price was $750,000 or higher, then a Foreign Resident Capital Gains Withholding (FRCGW) certificate needed to be provided on or before settlement. If there was no Certificate, then the Purchaser was under an obligation to withhold 12.5% of the price, to send to the ATO.
Now, the withholding percentage is 15% and it applies to every real estate transaction.
For the Purchaser, it creates an obligation to withhold and send to the ATO that 15% amount, if no Certificate is provided.
For the Vendor, it means that unless the Certificate is produced by settlement, then there is a 15% difference on the amount handed over. For a large Contract price, that is a considerable dent in the funds available at settlement.
Obtaining a FRCGW certificate should be an important task for any Seller, and should be arranged prior to signing any Contract to avoid issues and delays at settlement.
