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Changes to Foreign Resident Capital Gains Withholding

Changes to Foreign Resident Capital Gains Withholding

By Commercial Law Section

ATO Capital Gains Tax Conveyancing Legislation Real Property Taxation 


On 9 May 2017, the Government announced proposed changes to the foreign resident capital gains withholding (FRCGW) rate and threshold. The changes will apply to 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)
  • the FRCGW withholding 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.

Legislation for the Budget changes relating to FRCGW was introduced into Parliament on 1 June 2017 and received Royal Assent on 22 June 2017. The Bill and Explanatory Memoranda can be accessed here.

LIV Contract of Sale of Real Estate

To account for the changes to the FCGRW regime, the Law Institute of Victoria has amended the LIV / REIV Contract of Sale of Real Estate FRCGW special condition. The revised special condition is available here.


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