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View the latest news on FRCGW to better understand how the measure will affect their daily practice.

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Read about the work the LIV has been doing to support the public and profession.

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Find our about the Contract of Sale of Real Estate, ATO Resources and more.

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Foreign Resident Capital Gains Withholding

UPDATE: On 9 May 2017, the Government announced changes to the Foreign Resident Capital Gains Withholding (FRCGW) rate and threshold. These changes will apply to all contracts entered into on or after 1 July 2017:

  • For real property disposals where the contract price is $750,000 and above (currently $2 million); and

  • The FRCGW tax rate will be 12.5% (currently 10%)

The existing threshold and rate will apply for any contracts that are entered into before 1 July 2017, even if they are not due to settle until after 1 July 2017.

The threshold and withholding rate changes are contained within the Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Act 2017 (Cth).


The Tax and Superannuation Laws Amendment (2015 Measures No.6) Act 2016 (Cth) introduced a non-final withholding tax on the disposal by relevant foreign residents of certain taxable Australian property on or after 1 July 2016 (the measure).

While the measure is targeted at recouping capital gains tax from foreign residents, it affects a significant number of Australian tax residents involved in property transactions, as well as their lawyers and others assisting them in those transactions. As discussed below, this measure places a significant burden on all lawyers who engage with transactions relating to direct or indirect real property.

ATO Resources

The Australian Taxation Office (ATO) provides online forms for Clearance Certificate and Variation applications, as well as Purchaser Payment Notification through its website.

Practitioners can also access the PDF versions of these forms below:

Support for LIV Members

To ensure LIV members are best supported, the LIV has prepared a Practitioner Guide (updated July 2017) to help LIV members better understand how the measure may affect their daily practice (having trouble viewing the guide? Download the PDF).

The LIV also ran a full-day education workshop and forum before the commencement of the measure. A podcast with two of the speakers at the forum, Robert Lissauer, Director Taxation and International Business at Sothertons Melbourne, and Cameron Forbes, Senior Associate at King & Wood Mallesons Melbourne, is also freely available here and on iTunes.

Prior to the introduction of the measure, the LIV expressed significant concerns regarding the broad impact of the measure on legal practice, the wider business community and consumers, particularly given the limited time period between Royal Assent and commencement. The Law Council of Australia, Law Society of NSW and LIV have also raised these concerns in ongoing consultations with the Federal Government and relevant stakeholders. The concerns are summarised in a submission which is available here.

The LIV’s Legal Policy team has set up a dedicated email address for members to use to voice their concerns and queries regarding the measure.

  • Podcast: Concerns with the new regime

    On 1 July, a new foreign resident withholding capital gains tax measure will come into effect. Despite its name, this tax measure will affect all Australian tax residents – not just foreign residents – who are involved in property transactions.

    Listen to the podcast

Frequently Asked Questions

  • Has the LIV’s Contract for Sale of Real Estate been changed in light of the foreign resident withholding tax measure?

    The LIV has developed a special condition 1B to account for the measure. This special condition needs to be read with the  LIV/REIV Contract of Sale of Real Estate.

  • Does the regime apply where a contract of sale of real estate was entered into pre-1 July 2016 and did not include any provisions regarding the regime, and the purchaser has subsequently nominated a substitute transferee (with the nomination occurring after 1 July 2016)?

    We have sought guidance from the ATO on this query and their response is set out below:

    “In considering this issue we examined the standard form contract for sale of land (Victoria) as we needed to ensure that in nominating a substitute transferee (i.e. a person not party to the contract) it did not cause a new contract to be formed between the seller and the substitute transferee.

    We are satisfied that clause 18. of the general conditions of the standard form contract for sale of land (Victoria) permits the purchaser to nominate a substitute or additional purchaser.  We understand this to mean that where this clause is relied on, the purchaser is exercising a right under the existing contract to have the property transferred to some other person.  For FRCGW purposes the transaction would be taken to be entered into when the contract was exchanged, and the subsequent exercise of rights under that contract to nominate a substitute transferee would not cause a new transaction to have been entered into.

    If the contract was exchanged prior to 1 July 2016, but the substitute transferee was nominated after this date, subdivision 14-D would not apply as the transaction was not entered into after the start date of the relevant provisions (meaning no clearance certificate is required in this instance).

    Where the contract was exchanged after 1 July 2016 the substitute transferee would have the withholding obligation (provided the elements of section 14-200 were satisfied).”

  • Does the name on a Clearance Certificate need to reflect the name on the title exactly?

    Yes – however there are two exceptions:

    1. The name the Clearance Certificate is issued under for individuals is the name the ATO system uses for all notices: First Name – Initial (if any) – Last Name. The ATO accepts that vendors have fulfilled their obligation if they have sighted a Certificate where the First Name, Initial and Last Name are consistent with the name on the title.
    2. The obligation has also been met where a name has changed from the time the title was registered and the issuing of the Certificate if documentation has been presented by the vendor to the purchaser such as Marriage Certificates, Family Court Orders or Change-of-Name by Deed Poll and the purchaser retains copies of those documents.

    A match of honourific is also not required to fulfil the purchaser’s obligations.

  • Is the correct address required on the Clearance Certificate?

    No – a correct address on a Certificate is not required to fulfil the purchaser’s obligations. Practitioners will notice the representative’s copy of the Certificate does not have the vendor’s address, whereas the vendor’s copy currently does.