CGT Withholding (Foreign Residents)
A 15% withholding from the sale price when a foreign resident sells Australian property, with no minimum value threshold since 1 January 2025.
The foreign resident capital gains withholding (FRCGW) regime requires purchasers to withhold 15% of the purchase price when buying certain taxable Australian property from a foreign resident vendor. Since 1 January 2025 there is no minimum property value threshold — withholding applies to all contracts entered from that date regardless of price (previously it only applied to property worth $750,000 or more). The withholding is remitted to the ATO as a prepayment of the vendor's potential CGT liability.
If you are an Australian resident selling property, you should obtain a clearance certificate from the ATO before settlement to confirm you are not a foreign resident. Since 1 January 2025, Australian residents need a clearance certificate for all property contracts regardless of sale price. Without a clearance certificate, the purchaser is required to withhold 15% regardless of your actual residency status. Clearance certificates are free and usually issued within a few business days when applied for online through the ATO.
Foreign resident vendors can apply for a variation to reduce the withholding amount if their actual CGT liability will be less than 15% of the sale price. After lodging their Australian tax return, any excess withholding is refunded. The regime was introduced in 2016 at 10%, increased to 12.5% from 1 July 2017, and increased again to 15% (with the value threshold removed) from 1 January 2025. It applies to all types of real property including residential, commercial, vacant land, and certain mining and pastoral leases.
How it works
The foreign resident capital gains withholding regime shifts the responsibility for withholding tax from the seller to the buyer: when purchasing certain taxable Australian property from a foreign resident vendor, the purchaser is required to withhold 15% of the purchase price and remit it to the ATO, rather than the vendor paying CGT after the fact through their own return. Since 1 January 2025 there's no minimum property value that exempts a transaction — every contract entered from that date is potentially subject to the regime regardless of price, a change from the earlier rule that only applied above a $750,000 threshold.
Because the withholding obligation falls on the purchaser and the default position is to withhold, Australian resident vendors need to proactively obtain a clearance certificate from the ATO before settlement to prove residency and avoid the 15% being withheld from their own sale proceeds unnecessarily. Since the threshold was removed, this now needs to happen for essentially any property sale, not just higher-value ones — clearance certificates are free to obtain and are usually issued within a few business days when applied for online, so the main risk is simply forgetting to apply for one in time before settlement.
A genuinely foreign resident vendor isn't stuck with the full 15% as a final cost — they can apply to the ATO for a variation that reduces the withholding rate if their actual CGT liability will end up being less than 15% of the sale price, and after lodging an Australian tax return for the year, any amount withheld in excess of the real tax liability is refunded. The withholding rate itself has moved several times since the regime began in 2016 at 10% — up to 12.5% from 1 July 2017, then to 15%, with the value threshold removed entirely, from 1 January 2025 — so historical transactions may have been subject to a lower rate than a sale happening today.
Example: withholding on a $600,000 property sale
A foreign resident sells a $600,000 Australian residential property under a contract entered after 1 January 2025 — below the old $750,000 threshold, but that threshold no longer exists.
The purchaser is required to withhold 15% of the purchase price, or $90,000, and remit it to the ATO at settlement. The vendor then lodges an Australian tax return reporting the actual capital gain, and any amount withheld above their real CGT liability is refunded.
Related Terms
Capital Gains Tax (CGT)
Tax on the profit made from selling or disposing of an asset, such as property, shares, or cryptocurrency.
Foreign Resident Tax Rates
Tax rates for individuals who are not Australian residents for tax purposes — no tax-free threshold and different brackets.
Principal Place of Residence (PPOR)
Your main home, which is generally exempt from capital gains tax when sold.
Cost Base
The total cost of acquiring and holding an asset, used to calculate the capital gain or loss on disposal.
Stamp Duty (Transfer Duty)
A state/territory tax on property purchases, calculated as a percentage of the property value — rates vary by jurisdiction.