Foreign Resident CGT Withholding: 15% Rate From 1 January 2025
Last reviewed:
Primary tax-year context: Current Australian tax settings
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General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.
What changed on 1 January 2025
For property contracts signed on or after 1 January 2025, the foreign resident capital gains withholding rate is 15% of the market value of the property. This applies based on contract date, not settlement date.
When withholding applies
Withholding applies unless the purchaser has a valid ATO clearance certificate (for Australian residents) or a variation notice (usually for foreign residents where the 15% rate would exceed their estimated tax liability).
Clearance certificates for Australian residents
If the vendor is an Australian resident for tax purposes, they should apply for a clearance certificate before settlement. If the purchaser does not have the certificate at or before settlement, they must withhold 15% and pay it to the ATO.
Variation notices for foreign residents
Foreign residents can apply for a variation when the standard rate would over‑withhold. A variation notice sets a specific rate that the purchaser must apply.
Practical checklist
- Check the contract date to determine the applicable rate.
- Apply early for clearance certificates if you are an Australian resident.
- If you are a foreign resident, consider a variation if 15% would over-withhold.
- Ensure settlement documents reflect the correct withholding amount.