Reminder – Changes to the Foreign Resident Capital Gains Withholding Tax Regime

From 1 January 2025, the Foreign Resident Capital Gains Withholding Tax regime underwent significant updates with the withholding tax rate increased from 12.5% to 15%, and the property value threshold reduced from $750,000 to zero.

The Foreign Resident Capital Gains Withholding Tax is a measure implemented by the Australian government to ensure that foreign residents pay tax on capital gains made from the sale of Australian property.

When a foreign resident sells property in Australia, the purchaser is required to withhold a certain percentage of the purchase price and remit it to the Australian Taxation Office (ATO). This withholding tax helps to secure the tax revenue from these transactions and provides greater certainty about tax compliance for foreign investors in Australian real estate.

These changes aim to ensure foreign residents pay their fair share of tax on Australian assets and provide greater certainty about the operation of the rules.

For more information, please visit: Foreign resident capital gains withholding overview

If you would like to discuss or have questions in relation to the above, please contact our Property Team on (02) 4927 2900.