The Government recently passed legislation making changes to the foreign resident capital gains withholding laws (among other changes).

Editor: Foreign resident capital gains withholding is relevant for all vendors selling certain taxable real property (e.g., Australian land).

Even Australian residents can be caught by these laws because, if they do not have a valid ‘clearance certificate’ issued by the ATO at, or before settlement, tax must be withheld from the sale proceeds by the purchaser and paid to the ATO.

The new legislation increases the foreign resident capital gains withholding rate to 15% (from 12.5%), and completely removes the threshold (currently $750,000) before which withholding applies.

This means that all disposals of taxable real property are potentially subject to foreign residents’ capital gains withholding requirements regardless of the market value of the CGT asset.

These amendments take effect from 1 January 2025.